Follow the earnings, not the sentiment

The CNN Fear & Greed Index takes the temperature in terms of investor sentiment in the US stock market on a daily basis. It is composed of seven indicators including market momentum, stock price breadth, put and call options and market volatility. The index was showing greed a month ago and is now back into the fear zone mainly driven by inflation ‘angst’. However, it is interesting to note that earnings expectations for US companies are being revised upwards as we have the quarterly result season kicking in. At ECP, our process focusses on the earning power of the companies we invest in and not on sentiment indicators.