9 hours Ago
It is wise for investors “to be fearful when others are greedy and to be greedy only when others are fearful,” according to one of Warren Buffett’s classic aphorisms. But it’s not easy to pinpoint the mood on the Street. Markets are notoriously unpredictable, propelled by “animal spirits,” as the economist John Maynard Keynes termed the irrational forces shaping investor behavior.
You could look at the Dow or the S&P 500 to get a general sense whether stocks are up or down, but those numbers won’t tell you why stocks are moving one way or another. That’s partly why, a little over a decade ago, journalists at what was then called CNNMoney created the Fear & Greed Index — a kind of Wall Street vibe check that’s been garnering extra attention in recent days as global markets have tumbled in response to President Donald Trump’s tariff agenda. The index is an easy-to-read barometer of investors’ risk appetite on a 100-point scale, from extreme fear (0) to extreme greed(100).
It was designed to give a sense of how much markets are being driven by fear (selling stocks, buying safer assets like Treasury bonds) or greed (buying stocks, loading up on risk). On Friday afternoon, in the middle of a massive global selloff , the index was at a 4, firmly in “extreme fear.” On social media, some users are just discovering the index.
“New doom needle just dropped,” quipped one user on Bluesky on Thursday. Screenshots of the index, which has been in “fear” or “extreme fear” territory since December, now abound on X, Threads and Bluesky, often paired with a sarcastic “this is fine” sort of comment. “I do see it cited a lot, and it warms my heart,” said Lex Haris, former executive editor of CNNMoney, in an interview Friday.
An index is born The story of the index begins in the aftermath of the 2008 financial crisis and subsequent European debt crisis. “So, March 2009, the market bottoms, and there’s some sense of recovery, but we were all trying to figure out how to measure where we were, beyond just the daily ups and downs” Haris said in an interview. “And I was just very drawn to this concept of these two emotions driving the market.
” Haris and his team, including markets reporter Paul R. La Monica, called investors to figure out what data should go into the index. There was already a popular “fear gauge” on Wall Street known as the VIX, or CBOE Volatility Index, which launched in 1990.
“Lex and I had the idea to try and come up with a barometer for market sentiment that went beyond the VIX,” La Monica, now a senior markets analysis writer at Barron’s, said in an email. “Volatility is part of index but not the only thing.” They ended up with seven key indicators, including the VIX, market momentum, options contracts and demand for safe haven assets like Treasury bonds.
(The data-curious can read through each of those inputs online.) When the index launched in the spring of 2012, CNNMoney’s executive editor at the time, Chris Peacock, said it “captures in an eye-blink the underlying forces driving investors’ money moves.” The odometer-like graphic seems to resonate with everyday readers.
But I wanted to see what the pros thought of it, too, so I asked Steve Sosnick, chief strategist at Interactive Brokers, to weigh in. “No single indicator is perfect, but I like that yours has chosen a blend of easily understood, readily accessible metrics,” Sosnick said in an email. Sure, he might make a few technical tweaks, he said — like a longer horizon for the high-yield spread, or a slightly different put/call ratio.
“But overall, I think it’s very well constructed.”.
