We Americans have become pretty jaded about accepting what we hear and read. Most of us know there is more to the story, and even when the story makes us think things are going well, we worry there is more to it.
One of my recent blogs about the opioid epidemic in this country is a good case in point. I ended my plea with a sarcastic quip about the fact that money tends to perpetuate wrongs if keeping the wrong is in the financial interests of most parties. We just got more proof of that this week, via LinkedIn of all places:
The speed of information flow may be increasing, but the willingness to stop and do the right thing when we see something wrong seems to be on the decline. Yes, we celebrate it when we see it, but more often than not, we seem prone to whitewash issues rather than dig deeper to learn and perhaps make wiser decisions.
The world is a complex place and issues are often much more complex than soundbites. One of my good friends Ken Futch, author and professional speaker, does an excellent job of putting politically sensitive issues in perspective with his funny story about a politician facing reelection and being forced to answer the question of where he stood on the drinking.
Maybe it’s just me, but I have always been told that most things happen out of fear and greed, and my experience in the electric utility industry is that more often than not, fear is the basis for most utility actions … perhaps rightfully so given how bad public opinion can hurt when you fail to live up to expectations.
So, it was a bit of a surprise to me that Wall Street monitors these in the markets as an index. Read it for yourself. Then, consider where this index is right now … up against the greed limit … it can’t get much higher. I wonder if we could track the mood in the utility industry the same way? I think we can certainly all agree it is not pegged against this limit by any stretch of the imagination.
Investors are driven by two emotions: fear and greed. Too much fear can sink stocks well below where they should be. When investors get greedy, they can bid up stock prices way too far.
So what emotion is driving the market now? CNN Money’s Fear & Greed index makes it clear.
We look at 7 indicators:
Stock Price Momentum: The S&P 500 (SPX) versus its 125-day moving average
Stock Price Strength: The number of stocks hitting 52-week highs and lows on the New York Stock Exchange
Stock Price Breadth: The volume of shares trading in stocks on the rise versus those declining.
Put and Call Options: The put/call ratio, which compares the trading volume of bullish call options relative to the trading volume of bearish put options
Junk Bond Demand: The spread between yields on investment grade bonds and junk bonds
Market Volatility: The VIX (VIX), which measures volatility
Safe Haven Demand: The difference in returns for stocks versus Treasuries
For each indicator, we look at how far they’ve veered from their average relative to how far they normally veer. We look at each on a scale from 0 – 100. The higher the reading, the greedier investors are being, and 50 is neutral.
Then we put all the indicators together – equally weighted – for a final index reading.
When the S&P 500 (SPX) plummeted to a three-year low on Sept. 17, 2008 – the height of the financial crisis — the Fear and Greed index sank to 12. The index gained some ground to 28 before stocks finally bottomed out on March 9, 2009 and the latest bull market began.
Most recently, in the first quarter of 2012, stocks staged their best run in decades, and the index showed pure greed.
My worst subject in high school and college was history. Perhaps it was the way it was taught … lots of dates and details that just seemed to be disjointed in my mind. Well, there was one that I did and still do remember … 1492 … the date given to Columbus discovering America, even though he really didn’t do that.
It was years later that I was informed that he was probably not the first to discover America. He was just the first to get credit for discovering it. Then, I was to learn that what he did was not so honorable to keep him in the book of great sailors like Magellan and others.
Now, the balance of the story has shifted so significantly that there is a serious movement to remove him from the history books with any degree of greatness. In fact, the mood right now is to condemn him for all the wrongs done, even though they were not wrong in that day and time.
It took a long time for the Catholic Church to apologize about how they treated Galileo. It took a long time for us to abolish slavery, or at least make it unlawful. What we seem to fail to do is to learn from history, so we are doomed to repeat it.
It always strikes me how blatantly commercial people can be when they forget Susan’s warning. If you go on the Amazon website for the Show device and watch the video you will see the caring part. But, they forget that in the actual use cases as customers live with the device.
I am sure you will see the news media stomp on Amazon for the potential invasion of privacy … it will not be pretty to watch.