CNN's Fear and Greed Index: A chronicle of financial sentiment over time
Investing ain't always a piece of cake, not when Warren Buffett himself advises "to be fearful when others are greedy and to be greedy only when others are fearful." But figuring out if the crowd is going head-over-heels with greed or cowering in fear can be quite a conundrum.
Back in the day, journalists at CNNMoney decided to create a handy little tool to give us all a peek into the mood on the Street. This baby, known as the Fear & Greed Index, has been garnering quite a bit of attention lately, especially as the global markets have been sliding due to President Trump's tariff frenzy.
The index runs on a 100-point scale, from merciless fear (0) to unstoppable greed (100). It aims to offer a sense of how much the markets are being swayed by fear (shedding stocks, snuggling up to safer assets like Treasury bonds) or greed (buying stocks, stacking up on risk). You guessed it – on a chaotic Friday during a massive global selloff, the index was sitting pretty at 4, solidly in "extreme fear" territory.
If you've been scrolling through social media lately, you might've caught wind of this index. Some folks are even using it as a doom-o-meter. One witty user chimed in, "New doom needle just dropped," on Bluesky the other day. These days, it seems like screenshots of the index – stuck in the "fear" or "extreme fear" zone since December – are everywhere, often accompanied by sarcastic "this is fine" remarks.
Lex Haris, former executive editor of CNNMoney, shared a smile at this increased interest. "I do see it cited a lot, and it warms my heart," Haris said in a recent interview.
Born in the Trenches
The story behind the index starts with the aftermath of the 2008 financial crisis and the subsequent European debt crisis. Haris and his team, including markets reporter Paul R. La Monica, got to thinking about how to measure the market's pulse beyond just the daily ups and downs.
"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 explained in an interview. "And I was just very drawn to this concept of these two emotions driving the market."
The group dabbed their brains together and called investors to throw their hats in the ring to help decide which data should go into the index. They already had a popular "fear gauge" on Wall Street called the VIX (Volatility Index). But Haris and La Monica wanted a barometer for market sentiment that went beyond just the VIX.
After some brainstorming, they ended up with seven key indicators, including the VIX, market momentum, options contracts, demand for safe-haven assets like Treasury bonds, and more. You can dive deeper into each of those indicators 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."
So, what do the pros think? Steve Sosnick, chief strategist at Interactive Brokers, chimed in 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. "Volatility is part of the index but not the only thing." Sosnick might make a few tweaks here and there, but overall, he thinks it's a pretty stellar creation.
- Investors are increasingly turning to the Fear & Greed Index, created by journalists at CNNMoney, as a tool to gauge market sentiment beyond just the daily ups and downs, with some even using it as a doom-o-meter.
- According to Lex Haris, former executive editor of CNNMoney, the index was born out of the aftermath of the 2008 financial crisis, with a goal to create a safer barometer for market sentiment that goes beyond just the VIX (Volatility Index) and includes key indicators like market momentum, options contracts, and demand for safe-haven assets like Treasury bonds.
- Steve Sosnick, chief strategist at Interactive Brokers, appreciates the blend of easily understood and readily accessible metrics in the Fear & Greed Index, acknowledging its usefulness as a tool for understanding investor behavior, but suggesting that he might make a few tweaks to better optimize it for his purposes.
