Now, one would think that statements like “More small caps reducing shares, paying dividends” would seem to the investor at large to be a good thing. After all, how can more people thinking about how to allocate capital in a thoughtful and balanced fashion versus spending it willy-nilly or hoarding it be a bad thing?

But grand statements about “markets” are in fact very different from careful analysis of specific incidences of behavior. To, wit, take a careful look at Chart 4.

It seems very clear that “good behavior” seems highly coincident with periods of market tops, and its inverse is also correct. Which is no surprise.

When the good times are rolling, it is easy to feel good about things, like buying back stock at highs because the internal financial ruler clearly projects a continuation of a straight line in corporate growth. Or instituting a new dividend policy. The inverse again is true, when the world feels an inch away from melting back to protoplasm, the communal effort is to conserve and hoard, regardless of the actual investment proposition over a period longer than the next quarter.

And that is why investing is hard. The best investments are invariably made in difficult times with a racing heart and some sleepless nights, and are often laced with recrimination and bourbon-affected rethinks. They are rarely made by a group of well-meaning people walking out of a meeting back-slapping each other about how good things have recently been.