Why Are Investors So Fearful?

If you're a fan of Warren Buffett, you'll recognize this quote: "Be fearful when others are greedy and greedy when others are fearful."

In recent weeks, the investing outlook has become a bit murky, which has led some people to let their emotions get the best of them.

As you can see from the accompanying chart, fear—almost extreme fear—has become the driving force for investment decisions as the Fed talks tough about "higher for longer" with interest rates and the price of oil flirts with $100 a barrel.

So, is it time to be fearful, or are the markets just moving through another cycle? That's difficult to determine, but you don't have to look very far if you're looking for reasons to be scared.

A recent CNBC survey of 300 money managers found that 61% believe the stock market's gains this year can be attributed to a "bear market rally," and 41% expect a recession by mid-2024. This leads me to another one of my favorite Wall Street expressions: "Bull markets climb a wall of worry."

Let people be fearful. Let them worry about what's next. At times like this, focus on your investment strategy that reflects your goals, time horizon, and risk tolerance. We anticipated there would be some bumps along the way.

1. CNBC.com, September 27, 2023. “Investors see 2023 gain as a bear market bounce and expect a recession next year, CNBC survey shows.”