Welcome to the thoughts on the market. I'm Andrew Sheets, Chief Cross Asset

Strategy from Morgan Stanley. Along with my colleagues bring you a variety of

perspectives, I'll be talking about trends across the global investment landscape and how we put those different ideas together.

It's Friday, October 25th at 2 p.m. in London.

Like high school, investing involves an inordinate amount of interest in and time spent talking about what other people may be up to.

And unlike high school, it's for a good reason.

Sentiment is among the most powerful forces in the The absolute low in price occurs by definition when things look most bleak.

For this reason, what investors are thinking can be as or more important than conditions

in the underlying economy.

And here lies one of the most commonly cited reasons we hear to be more optimistic.

Yes, this argument goes, economic and earnings growth are slowing.

But investors are already concerned enough about these factors that the market is more

likely to go up than down. We have no problem being contrarian. Trying to ZIG

when others ZAG is a central tenant to long-term successful investing.

But we do have a problem with this line of argument, or specifically three.

First, while there is no single measure for market optimism,

several measures that we do follow suggest significantly more optimism over the last three weeks,

following a pause in the US-China trade dispute and developments in the UK around Brexit.

As it so happens, that higher optimism is returning just as global stocks once again

moved the high end of a range that's held for over 18 months.

Second, our work suggests that while trying to be contrarian works most of the time, it's a strategy vulnerable

to changes in the market's regime, especially when a bull market ends.

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