Warren Buffett notoriously said to be greedy when others are fearful and fearful when others are greedy. Nowadays people are certainly afraid.

Corresponding a survey from the American Association of Individual Investors, 60.9% of respondents are currently bearish. This is an uptrend from a previous survey that showed 46% of individual investors were down.

The sharp drop in sentiment is likely due to a recent Consumer Price Index (CPI) report pointing the way Inflation has increased. The notion that inflation peaked sometime in June/August is now invalid.

Also a current one profit warning out FedEx FDX underscores the weakness in global shipping demand. The counterpoint is that since the peak of the Covid-19 lockdown, consumer spending has shifted and people are spending more money for travel as opposed to goods.

Higher-than-expected inflation coupled with warnings from big companies like FedEx add to the negative sentiment. The Fed will have no choice but to remain hawkish until inflation cools.

A high percentage of individual investors will remain pessimistic and eventually the market will find a bottom that coincides with the “peak of fear”. Whether we are there now remains uncertain.