Published By Banyan Hill Publishing | | | | Published By Banyan Hill Publishing | | | | Be Fearful When Others Are Greedy By Charles Sizemore
Chief Editor, The Banyan Edge | Banyan Nation, I don’t make a habit of getting investment ideas from CNN.
Nothing against the news network, of course. It’s just that by the time information has made its way to a major news outlet, the cat is already out of the bag and there is nothing left to trade.
That said, CNN does have one tool I like. Its Fear and Greed Index is a compilation of seven indicators. Together, they give us a pretty good snapshot of the market’s mood.
And yes, you guessed it.
After the torrid run in tech stocks this year — driven by the artificial intelligence boom — the market is showing signs of extreme greed.
Before I get into that, I want to mention that Ian King and I will be chatting about AI in Monday’s episode of The Banyan Edge Podcast.
We’ll be covering everything you’ve ever wanted to know about AI, but were too embarrassed to ask.
And believe me, you’ll want to watch this one. Because for all the talk about AI, most people might not actually understand it.
Will AI bring us the sentient android Data from Star Trek? Will it go rouge like Skynet, and create an army of Terminator assassin robots?
Or is it simply a tool that will enable us to be a little more productive?
If you want to find out more, make sure to tune in on Monday…
And now, back to greed! Fear & Greed in the U.S. CNN’s Fear and Greed Index is currently reading a score of 81, which ranks as “extreme greed.”
 (Click here to view larger image.) The index is a composite of several factors: - Market momentum.
- Stock price strength.
- Market breadth.
- The put-to-call ratio.
- Market volatility.
- Safe haven demand.
- Junk bond demand.
Now, some notes on a few of these terms:
Stock price strength is measured here as the number of stocks at 52-week highs versus those at 52-week lows.
Safe haven demand is the performance of stocks relative to bonds.
And junk bond demand is the spread between Treasurys and comparable junk bonds.
The market volatility metric is neutral, and the breadth metric is registering “greed.” The remaining five are all showing “extreme greed.” Putting the “Junk” Data in Context Now, as with all market indicators, you have to consider these in context.
For example: Stocks are massively outstripping bonds, in part because the Federal Reserve is still in “tightening mode.”
Investors choosing stocks over bonds doesn’t necessarily mean they’re greedy, but rather that they don’t see bonds as a great buy when the Fed is raising rates.
However, I find the “junk” spreads interesting.
Right now, investors are willing to take a relatively small spread over the Treasury rate, in return for accepting the significantly greater risk that comes with junk bonds.
That is a sign of a complacent market that is no longer taking risk seriously.
You’ve no doubt heard Warren Buffett’s timeless advice to be “greedy when others are fearful, and fearful when others are greedy.”
Well, greed is back.
And while we don’t necessarily need to hide in an Idaho bunker, a little caution makes sense right now. We should choose our investments carefully and leave a little extra cash to pounce on any bargains that pop up.
On that note, let’s see what The Banyan Edge team has been discussing this week. | | | The threat of a new digital dollar is so dire, it would “give federal officials full control over the money going into, and coming out of, every person’s account,” warns Forbes.
When money is purely electronic, sticky-fingered socialists could shrink your Social Security benefits or even cancel them entirely.
This isn’t a theoretical threat. As you’ll see in this video, it has already begun. | | | Weekly Recap  - “Messi Effect” Could Boost Apple Shares
Lionel Messi, the GOAT of international fútbol — the greatest of all time — is moving to Miami. This is fantastic news for American soccer, as it immediately raises its profile and makes it relevant.
But this groundbreaking deal is also a media game-changer. And it may just be the biggest news for Apple in 10 years.
- New Bull Market Dawns for Tech Stocks
Artificial intelligence is the main driver behind this rally, as demand for the software expands to what seems like every sector of the market (with the help of microchip technology).
And it’s helped push us into a new bull market … for tech stocks!
- Ignore the Ticker, Buy Into This Instead
Investing doesn’t have to be complicated. Really, it requires nothing more than 4th-grade math skills and a general idea of the business you’re investing in.
So when you just look at the stock and not the business, you miss out on opportunity. Here's why you should buy into businesses, not stock tickers. (And see how you can invest in a $1 million portfolio.)
- The Fed Fiddles as the Economy Burns
Fed Chairman Jerome Powell could be likened to emperor Nero, fiddling while Rome burns. He has done many things right.
But the Fed’s decision to wait for additional data before raising rates is concerning because it further risks sparking a fire in the economy that will leave many families behind.
- The Federal Reserve’s “Secret” Rate Hike
Everyone is focused on the Fed's decision to pause interest rate hikes. But its power extends far beyond pulling the rate hike lever. In fact, the Fed is arguably the most powerful force in global markets. Here’s what you can do about it.
(Plus, a special investment opportunity that could withstand the ups and downs of rate hikes.)
Stay Tuned for the Monday Pod! 🎧  Enjoy your Saturday! And be sure to tune in on Monday — when Ian and I break down the virtually limitless opportunities in AI!
In the meantime, if you want to send us a message, please reach out at BanyanEdge@BanyanHill.com.
Regards,
Charles Sizemore
Chief Editor, The Banyan Edge | | | This is a check for $1 million, which I’m using to fight for capitalism and against socialism.
If you believe, as I do, that America is the greatest nation on Earth … and that we cannot let the socialists win, click here for full details.
You’ll even see why, over the next decade, I fully expect this $1 million to turn into $10 million.
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