A market running downwind hard and fast is a dangerous thing

Blain’s Morning Porridge 20th, July 2026 “The pessimist complains about the wind; the optimist revels in it; the realist adjusts the sails.”There may be multiple storms and whirlpools on the horizon, but the market remains convinced it will weather them all. That’s a sign of dangerous times. There are times to let the boat run free, and times to trim the sails and slow before something breaks with catastrophic consequences: will it be the AI Bubble, Debt, Iran & Oil, or a No-See-Um? Sorry for all the sailing allusions today, but we’re sailing for home after a fantastic week on the Solent. Well done Spain! How did Trump stay awake? I didn’t.You need to be an optimist to play this market. And an optimist you need to be, because market returns are not based on the brilliance of your own utterly brilliant analysis, but on what the whole herd of the market collectively believes – which is “nothing to overly worry about”. Contrarians are only right when the crowd is proved wrong – which doesn’t happen as much as it should (for reasons discussed below.) The best investors are the ones who can strip out the crowd’s noise – often by taking long-term “patient” views on the basis even the market crowd cannot resist the long-term consequences of financial gravity.I’ve been thinking about it while sailing in the bright sunshine weather on the South Coast of England. I constantly see parallels between reading the markets and the tau of using the weather and tides to drive the boat.You can read the Morning Porridge by subscribing on ⁠www.morningporridge.com⁠, and have it delivered fresh to your inbox every morning!