Perhaps Chris didn’t explain this fully!
The Fear & Greed Index is put out by CNN Business. (It’s legitimate, been running for many years, and it was not just cobbled together yesterday in someone’s imagination). The Index runs from 0 which represents pure Fear to 100 which is Pure Greed. The middle is 50, which is “Neutral”.
The Index is found here: https://money.cnn.com/data/fear-and-greed/?iid=EL
It is put together from seven indicators, which they describe on the site, and which are equally weighted.
A year ago the Fear and Greed index was at 66 which represents Greed.
A month ago it was at 9 which represents Extreme Fear.
At yesterday’s close it was at 2 (on a scale of 0 to 100). Do you realize just how much fear that represents? It’s a lower number (higher panic level) than any other reading I was able to find looking back as far as I could on their graph.
For examples:
It peaked at about 95 in November of 2017.
During this summer it got up to about 78.
How does it do in crises. Here’s a quote from the site.
When the S&P 500 plummeted to a three-year low on Sept. 17, 2008 - the height of the financial crisis – the Fear and Greed index sank to 12. The index gained some ground to 28 before stocks finally bottomed out on March 9, 2009 and the latest bull market began.
And we are at 2 !!! It’s lower than it’s ever been as far as I can look back on their graph of values. If you don’t think the world is coming to an end, you just don’t get a more bullish opportunity than this to buy good companies! If you believe in Buffet’s saying that you should be greedy when others are fearful, this is it, folks! It may not be the absolute bottom, but it’s likely that almost anyone who is going to sell has already done so, or is very close to finishing. You may not get another chance like this.
That’s just my opinion. I hope that it’s of some use,
Saul
PS - What are the indicators? Here’s a brief outline but they explain everything more fully on the site.
•Stock Price Momentum: The S&P 500 versus its 125-day moving average
•Stock Price Strength: The number of stocks hitting 52-week highs and lows on the NYSE
•Stock Price Breadth: The volume of shares trading in stocks on the rise versus those declining.
•Put and Call Options: The put/call ratio, which compares the trading volume of bullish call options relative to the trading volume of bearish put options
•Junk Bond Demand: The spread between yields on investment grade bonds and junk bonds
•Market Volatility: The VIX, which measures volatility
•Safe Haven Demand: The difference in returns for stocks versus Treasuries
For each indicator, we look at how far they’ve veered from their average relative to how far they normally veer. We look at each on a scale from 0 - 100. The higher the reading, the greedier investors are being, and 50 is neutral. Then we put all the indicators together - equally weighted - for a final index reading.
You could add my list of headlines from Business Insider to this group of indicators. Of six articles, four had Market “Crash” in the title and a fifth had “bubble bursting”. That’s like November 2008.
S.