Understanding the Fear and Greed Index | James L. McEnerney
The fear and greed index is a measurement of the two primary triggers for market movement, James L. McEnerney explains. When times are good, and the market is high, he states that the greed index is usually at its highest. This fact means that people are more likely to be buying, James L. McEnerney states, and trying to stockpile stocks for a sell-off as the market expands and grows.
Fear is the balancing factor in this equation. According to James L. McEnerney, fear is usually seen more when the market starts to go down. For example, the recent Covid-19 pandemic caused a lot of fear in the general public and investors. As a result, the general trend was towards selling as the market plunged and then recovered more as people better understood the pandemic.
Although there is much more to stock market success than these two concepts, James L. McEnerney believes that they underline all market movement and can be used by anybody interested in investment. However, investors need to understand what triggers these changes and how an investor can use both fear and greed to their advantage.
Properly Using the Fear and Greed Index | James L. McEnerney
Gauging greed is usually straightforward, James L. McEnerney says: all investors want to make as much money as possible. As a result, it is often a good idea to push towards buying when you see others around you doing it. But what is driving that greed?
Investigate the most significant gains, James L. McEnerney explains, and you’ll find why people are so greedy. Right now, pharmaceutical stocks are soaring because of the Covid-19 pandemic, and buyers are greedy to own shares in businesses likely to find treatments.
If you can predict when greed will start to top off, you’ll know when it is time to sell. Typically, James L. McEnerney says, greed has a peak period that slows down eventually. For example, the pharmaceutical companies previously mentioned may peak after the Covid-19 pandemic has slowed.
At this point, investors may start to feel a little fear – the stock is lagging, and the greed that caused the buying is declining. Then, it is very important that you sell BEFORE fear takes over the market and turns a bull into a bear. Anticipatory moves like these, James L. McEnerney states, help you to make as big of a profit as possible before the market’s inevitable slide.