Extreme fear now

[Lsbcal]

I've been a fan of CNN's Fear & Greed index: https://money.cnn.com/data/fear-and-greed/. It uses indicators such as the VIX (see their explanation).

Of course, it is not predictive. But it nicely shows market sentiment. Currently it is showing "extreme fear". Such episodes in recent years have not lasted long. That is pretty easy to understand given the state of my stock portfolio . But I'm not doing anything, just watching as I have my max stock allocation.

 

[Montecfo]

Fear is a good buy signal.

 

[ExFlyBoy5]

I bet they use this graphic in the ad sales pitch deck at CNN.

 

[Lsbcal]

Note this is an apolitical thread. Also does not consider Boglehead dogma as this is in the "Active investing ..." part of the ER site.

 

[Helen]

Fear is a good buy signal.

I think the Feds are just beginning QE. I'm not going to fight the Feds.

I'm pretty comfortable with a 50/50 portfolio, but if valuations come down I would like to move more into stocks and leave them there to grow for donations and heirs.

 

[aja8888]

I think the Feds are just beginning QE. I'm not going to fight the Feds.

I'm pretty comfortable with a 50/50 portfolio, but if valuations come down I would like to move more into stocks and leave them there to grow for donations and heirs.

My energy stocks and ETFs bought mid last year have kept me whole. I'll add to my S&P ETF when there is more blood in the streets. I'm about 40 % equities right now and will stay at that level, or less going forward. I'm keeping an eye on what the FED does to "attempt" to curb inflation.

 

[razztazz]

What fear? the market has been up like a rocket for... oh..., no reason, most of the past several days. War, inflation, more inflation caused by war, what fear?

 

[Lsbcal]

What fear? the market has been up like a rocket for... oh..., no reason, most of the past several days. War, inflation, more inflation caused by war, what fear?

Funny, I had to check on your contention that the market has been up. That is indeed true for the last 5 sessions overall. And I'm glad of that. But year to date not so good unfortunately, down about -8% for the SP500.

 

[razztazz]

Funny, I had to check on your contention that the market has been up. That is indeed true for the last 5 sessions overall. And I'm glad of that. But year to date not so good unfortunately, down about -8% for the SP500.

If it keeps up this "unseemly" trend it'll make up the 8% fast. But this might also be-----

1) your basic average over-reaction.

2) "Getting it while it's hot." type volatility. A week or two from now we'll be lower again.

3) A potential break in the clouds. The war in question won't get worse, The West is united. Vlad will be offered some way to save face while he goes home. IOW A nice safe landing in spite of all the trouble. Add to that people have noticed that war can be good for business. This of course is a gamble like most investments are.
4) People think #3 is happening but Vlad takes it personally and doubles/triples down. Then it really starts hitting the fan. Then lower stock markets.

I don't know what all of this does to the pre-existing underlying market environment. e.g. The inflation with pending rate increases we were all talking about. Overvaluations that didn't seem interested in coming down. 30 trillion in national debt. They were all there 3 weeks ago. Three months ago. Is the Urkraine thing making it worse in the long run? Or are the potentialities of war making those things not so important anymore?

 

[NW-Bound]

Oh my gosh! Extreme Fear!

Buy, buy, buy...


PS. I would buy if my stock AA is not already at more than 74%. Back in Dec 2021, I lowered my stock AA to the mid 60%. It has been slowly raised up via put options getting assigned.

 

[Winemaker]

I was at local Fido office today, transferring late DM's assets. I asked the rep, how are people reacting to the recent volatility, and he said about 80% are holding pat and riding it out. The other 20%, he said have different goals, locking in what they have because they're close to the magic number, or are scared to death, not in that order.

 

[oldtimer]

Funny, I had to check on your contention that the market has been up. That is indeed true for the last 5 sessions overall. And I'm glad of that. But year to date not so good unfortunately, down about -8% for the SP500.

But over the last year it is good fortunately. SP500 is up nearly 15% over the last 12 months.

 

[GenXguy]

The fear will get worse as the S&P 500 tumbles back down after short term bumps up.

 

[razztazz]

The fear will get worse as the S&P 500 tumbles back down after short term bumps up.

Yes, I find it hard to believe that at this early stage "the market" or anybody else can forecast such happy times ahead. S&P up 80, DJIA up ~600 today. So what happened to all the problems we had pre-Ukraine...?

 

[NW-Bound]

Yes, I find it hard to believe that at this early stage "the market" or anybody else can forecast such happy times ahead. S&P up 80, DJIA up ~600 today. So what happened to all the problems we had pre-Urkraine...?

Those problems are still there.

That's why I sold 21 out-of-the-money covered call contracts today, with expiry next Friday 3/11.

 

[Dtail]

This fear/greed index changes at the drop of a hat.

 

[RobbieB]

I'm not afraid -

 

[razztazz]

This fear/greed index changes at the drop of a hat.

Yes, of all those so-called "indicators" and "contrarian indicators" Fear vs Greed is the worst. I don't understand what people see in the VIX either. Volatility? I've never seen how anyone could make a call using that information.

 

[Lsbcal]

Yes, of all those so-called "indicators" and "contrarian indicators" Fear vs Greed is the worst. I don't understand what people see in the VIX either. Volatility? I've never seen how anyone could make a call using that information.

I think of this as the raw emotions of the crowds. Very human. Not predictive except maybe at extremes. Of course, the most extreme points are only known in the rear view mirror.

I only know my own feelings which swing quite wildly. Not that I act on them but many do. I like to think I'm very analytical but cannot get completely away from my emotional side.

 

[kgtest]

Looking back at what happened yesterday, or this morning even...is too late to have acted upon.

For instance DW had almost $2MM out of the market when the "fear" of a certain invasion was inevitable. I bought him back in this morning just about at the open on that small dip. Had I waited until this afternoon, when the left coast had woke up and started logging into the accounts...I woulda missed it. (It being the gains).

I actually am the opposite of afraid. I look forward to the next drop so I can buy myself back in, but I buy in every week so its kind of irrelevant...how MUCH I buy is a better question.

I usually notice that after the VIX Is at a high, the market has already dropped faster then I could have sold.

 

[skyking1]

as long as it is just fear, it's OK. When it goes to Fear and Loathing, watch out!

 

[target2019]

I've been a fan of CNN's Fear & Greed index: https://money.cnn.com/data/fear-and-greed/. It uses indicators such as the VIX (see their explanation).

Of course, it is not predictive. But it nicely shows market sentiment. Currently it is showing "extreme fear". Such episodes in recent years have not lasted long. That is pretty easy to understand given the state of my stock portfolio . But I'm not doing anything, just watching as I have my max stock allocation.

That F&G page came through to me the other day and I briefly looked at it.

It's as valid as any other group of indicators. If someone doesn't like the needle in the red, then they look at another site.

But there is some wisdom in these seven indicators.

Seven Fear & Greed Indicators

• Junk Bond Demand - Investors in low quality junk bonds are accepting 1.74 percentage points in additional yield over safer investment grade corporate bonds. This spread is higher than what has been typical for the last two years and indicates that investors are risk averse.
• Put and Call Options - During the last five trading days, volume in put options has lagged volume in call options by 55.34% as investors make bullish bets in their portfolios. However, this is still among the highest levels of put buying seen during the last two years, indicating fear on the part of investors.
• Stock Price Strength - The number of stocks hitting 52-week lows exceeds the number hitting highs and is at the lower end of its range, indicating extreme fear.
• Market Volatility - The CBOE Volatility Index (VIX) is at 30.74, 29.80% above its 50-day moving average and indicates that investors are very concerned about a decline in the stock market.
• Safe Haven Demand - Bonds have outperformed stocks by 2.70 percentage points during the last 20 trading days. This is close to the weakest performance for stocks relative to bonds in the past two years and indicates investors are fleeing risky stocks for the safety of bonds.
• Stock Price Breadth - The McClellan Volume Summation Index measures advancing and declining volume on the NYSE. During the last month, approximately 2.28% more of each day's volume has traded in declining issues than in advancing issues, pushing this indicator towards the lower end of its range for the last two years.
• Market Momentum - The S&P 500 is 3.43% below its 125-day average. During the last two years, the S&P 500 has typically been above this average, so rapid declines like this indicate extreme levels of fear.

I'm not trading on any of those indicators either.

 

[DrRoy]

I don't trade on this or any other signal, but it is relevant.

 

[NW-Bound]

I think of this as the raw emotions of the crowds. Very human. Not predictive except maybe at extremes. Of course, the most extreme points are only known in the rear view mirror.

I only know my own feelings which swing quite wildly. Not that I act on them but many do. I like to think I'm very analytical but cannot get completely away from my emotional side.

This is just one of the inputs I consider in making trade decisions. Actually, I forgot to look it up until this thread.

It's not bad, in fact is somewhat redundant as I can tell the fear level by how much and how fast the market drops.

It just describes the status quo. It does not claim to predict anything.

 

[F.I.R.E User]

All this news is music to my ears. For long term investors like us it’s not an issue.