Fear is the Current Return Driver

As I said in “Investor Sentiment is Bearish“, I’ll point out my observations about investor sentiment when it gets to an extreme and asymmetrically skewed to fear or greed. I pointed out the most recent AAII Investor Sentiment reading is bearish. Another simple gauge of investor sentiment is the Fear & Greed Index. As you can see, it hasn’t gotten to the extreme fear point, but fear has recently been the driver for stocks. Its reading was Greed just a month ago. Stock prices fell, investor sentiment shifted to fear. I believe many investors oscillate between the fear of missing out and the fear of losing money and I’ll share the observations as they occur as empirical evidence. When investor fear increases, eventually the last seller has sold and it pendulum swings back the other way.

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2 responses

  1. Pingback: Investor Sentiment Reaches Extreme Fear « Asymmetry Observations

  2. Pingback: September is statistically the worst month for the stock market « Asymmetry Observations

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