Crazy Investor Indicator Update

I haven’t posted this in a while but below is a picture of the crazy investor indicator.  As you can imagine with the markets calming down, we are seeing the fear in the markets go away as well.  The way I measure fear and confidence allows me to get a gauge on the market.  Right now, we’re seeing the highest level of confidence since September.  Now, I woulnd’t say we’re seeing outright confidence.  I’d say we just saw the panic and fear go away.  So, we’re somewhere in the middle.  Which is how I see the stock market.  Not too hot, not too cold.  Unlike goldilocks, not just right though.

Remember that in a bear market, the overconfident people are wrong.  I believe we’re still in a bear market and when this indicator gets to the bottom showing investors are way too complacent, then we might have to take really defensive positions.  For now, we’ll keep our strategy of shorting the overall market while going long individual companies and sectors that are performing well.

Crazy Investor Indicator 12 30 08


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