One of the questions I get asked more than ever at the moment is ….
Have markets gone too far, too quickly?
As mentioned earlier, the moves in stock markets over recent months (in both directions) have been very quick and trying to time the market is a dangerous game and the first thing I always respond with when asked this question is to reaffirm that we are long term investors, which matches our clients’ needs and interests.
However, we live in a world where technology has made everything instant – investors want to know what is going to happen tomorrow or in a week’s time. The CNN Business Fear & Greed Index has always been a good way of framing this.
This index has always been useful because it does go from the far left to the far right. If interested, the below Fear & Greed Index” is available online here with more information on how it’s created.
As you can see from the current reading, equity markets have moved back into “Greed” territory but the rally in markets over the last few months is not at an extreme. This reflects the fact that we have had a good run in equity markets – but we are not, in the short term, at overbought levels. What is also interesting is to see that 1 month and 1 year ago the pointer was in the “Fear” territory.
Alex Brandreth
Chief Investment Officer
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