Learn English Through Investment Psychology
🔍 What Is the Fear & Greed Index?
The Fear & Greed Index is a popular indicator that measures investor sentiment — whether the market is dominated by fear or greed.
It was created by CNN to visualize the emotions driving the stock market.
The score ranges from 0 to 100:
- 0–49: Fear — investors are pessimistic
- 50–100: Greed — investors are optimistic or overconfident
This index acts as a barometer of market psychology, helping investors identify periods of excessive optimism or panic.
💬 Key English Phrases About Market Sentiment
① “Be fearful when others are greedy, and greedy when others are fearful.”
— Warren Buffett
This famous quote captures the essence of the Fear & Greed Index.
When emotions run high in the market, staying calm and rational is a major advantage.
② “The Fear & Greed Index reflects the overall market sentiment.”
👉 Market sentiment means the general mood or feeling among investors.
You’ll often see this phrase in financial news or reports.
③ “Extreme greed can be a warning sign of a market bubble.”
When everyone is overly confident, it may signal that prices are becoming unrealistic.
A warning sign is something that alerts you to potential danger.
④ “Extreme fear often signals a buying opportunity.”
When panic dominates the market, smart investors often look for undervalued assets.
Fear creates opportunities for those who stay calm.
📊 The Seven Components of the Index
The CNN Fear & Greed Index is based on seven key indicators:
- Stock Price Momentum
- Stock Price Strength
- Stock Price Breadth
- Put and Call Options
- Junk Bond Demand
- Market Volatility
- Safe Haven Demand
Together, these factors show how emotional the market is at any given time.
💡 Tips for Investors
- The index is not a perfect trading signal.
- But it’s a useful tool to stay objective and understand market mood.
- Especially in volatile times, it helps investors avoid emotional decisions.
🗣️ Useful Phrases to Remember
| English Phrase | Meaning |
|---|---|
| The market is driven by fear and greed. | The market moves based on emotions. |
| Investors are becoming more fearful. | People are losing confidence. |
| The index shows extreme greed today. | The market looks overheated. |
| It’s time to stay calm and rational. | Don’t let emotions guide your trades. |
🧭 In Summary
The Fear & Greed Index reminds us that the stock market is ruled by emotion.
It’s not just numbers — it’s psychology.
By checking the index regularly, you can learn to control your emotions, make better decisions, and avoid being swept up by the crowd.
In investing, emotional control is power.
🪙 Vocabulary Spotlight
| Word | Meaning |
|---|---|
| Greed | Strong desire for wealth or gain |
| Fear | Feeling of worry or panic about loss |
| Sentiment | General attitude or mood |
| Barometer | A tool or measure that shows change or trend |
