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StockCram is not a broker-dealer, investment adviser, or financial institution. All content is for educational and informational purposes only and should not be construed as personalized investment advice. Consult a qualified financial professional before making investment decisions. Past performance does not guarantee future results.Simple Definition
The overall mood of investors - whether they feel optimistic or pessimistic.
Why It Matters
Sentiment is often wrong at extremes. When everyone is euphoric (late 1999, early 2021), it's often near a top. When everyone is terrified (March 2009, March 2020), it's often near a bottom. Warren Buffett's famous advice: 'Be fearful when others are greedy, and greedy when others are fearful.' Contrarian investors watch sentiment closely.
Key Points
- Fear & Greed Index (CNN) measures sentiment from 0 (extreme fear) to 100 (extreme greed)
- Put/call ratio: High put buying suggests fear; high call buying suggests greed
- Sentiment is a contrarian indicator - extreme readings often precede reversals
Related Terms
Common Questions
The overall mood of investors - whether they feel optimistic or pessimistic. Sentiment is often wrong at extremes. When everyone is euphoric (late 1999, early 2021), it's often near a top.
Sentiment is often wrong at extremes. When everyone is euphoric (late 1999, early 2021), it's often near a top. When everyone is terrified (March 2009, March 2020), it's often near a bottom. Warren Buffett's famous advice: 'Be fearful when others are greedy, and greedy when others are fearful.' Contrarian investors watch sentiment closely.
Fear & Greed Index (CNN) measures sentiment from 0 (extreme fear) to 100 (extreme greed)
Put/call ratio: High put buying suggests fear; high call buying suggests greed
Sentiment is a contrarian indicator - extreme readings often precede reversals