Warren Buffett’s 1986 letter to Berkshire Hathaway Inc. (BRK.A) shareholders read: “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” We are in a period of market greed right now, even if you haven’t noticed it. So, this week, make sure to take a good look at your portfolio, observes Kelly Green, editor of Dividend Digest.
Last week, the CNN Fear & Greed Index moved into Extreme Greed territory. And it seems to be holding that level into this week. I still don’t know where the optimism is coming from.
Earnings season starts this week, mostly with companies whose fiscal quarter ended May 31. The “official” start of the earnings season is marked by earnings from JPMorgan Chase & Co. (JPM), Wells Fargo & Co. (WFC), and Citigroup Inc. (C). They will all report next Tuesday.
According to the latest FactSet Earnings Insight, “For Q2 2025, the estimated earnings growth rate for the S&P 500 is 5%. If 5% is the actual growth rate for the quarter, it will mark the lowest earnings growth reported by the index since Q4 2023.”
That doesn’t seem like anything to pop champagne about. I even checked to see if any sectors of the market were overperforming, which would point me in the right direction. No clear patterns there.
If you have big gains on companies you’re not confident about, use today’s greed as a motivator to sell. Lock in those gains and be ready to redeploy that money when sentiment settles.
And keep your watchlist up to date. One thing is certain about all earnings seasons: We will see greater movement in the markets as more data is released. That fuels investor sentiment, which creates more movement, which further fuels investor sentiment…it’s a self-reinforcing loop.
In our current market climate, we could see minor negative news compound into a big market move. This creates a pocket of fear, and that’s the time to act greedy and lock in a great entry price. Be prepared with the companies you’d love to have in your portfolio and the share price you’re willing to pay.
