Markets swing between excessive optimism and excessive pessimism. The goal isn’t to predict price — it’s to understand when risk is being underestimated or overestimated, and adjust your behavior accordingly.
Risk changes with confidence, leverage, and expectations — not just volatility.
When everyone feels safe, risk is often underpriced. When fear dominates, opportunity grows.
This is not a top/bottom caller. It helps you judge which side of the cycle you’re on.
Look at narratives, leverage, valuations, and how “easy” money feels.
You don’t need to be exact. Decide which side is more likely and how extreme it feels.
Extreme optimism → reduce risk. Extreme pessimism → prepare and act patiently.