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Simultaneous Fear & Greed

During my many decades as an investor, I’ve seen extremes of Fear or Greed, but I don’t recall a market that was characterized simultaneously by both.  That’s exactly where market conditions are now.

FEAR:  People are deeply mired in anxiety over health effects of COVID or side effects to the economy.

GREED:  People are exuberantly trying to ride the increasing wave of stock prices.

It’s been my experience that manias don’t end well, resulting in a market that changes trend due to exhaustion.  With Fear & Greed at simultaneous extremes, I suspect we’re headed for even more drastic market turbulence.

HOWEVER…markets always right themselves.  Note the chart of the Hang Seng index during the SARS outbreak that devastated the Hong Kong economy in 2003.  Travel bans scuttled the island’s travel, hospitality, and real estate sectors; yet within a year later, the market was consistently making new highs.

My advice is to not be fearful or greedy.  Moderate your emotions so that you’re investing based on reason, not fad or fantasy.  Easier said than done.