Investors are closing out 2025 in greed mode.
Technically, global stocks were down two consecutive weeks headed into the highest of high Western holidays, but equities are near enough to records.
From the “Liberation Day” lows, MSCI’s gauge is up 35%. From the October 2022 lows, the gain’s 80%. And from the March 2020 pandemic panic lows, the most widely-cited global equity benchmark’s up more than 150%.
Halfway through what, on some scores anyway, is the worst overall decade for humanity in living memory, stocks are up about 75%.
What can you say? “Should’ve bought the dip(s).” Or, “Capitalism always finds a way.” As Sven Beckert puts it, in his new, encyclopedic account of history’s most successful secular religion, capitalism is the first human-made construct powerful enough to rival “the geological forces that have shaped our Earth.”
We live not in the Anthropocene, but rather the Capitalocene. That’s observable not just in hyper-capitalism’s capacity to destroy the ecological order which makes the planet habitable (to say nothing of the communal bonds which undergird well-functioning societies), but in its ability to thrive in the presence of the destruction it indirectly facilitated or brought about straight away.
Traditional, pre-Industrial Revolution piety regards avarice as a sin. But in the cult of capitalism, it’s the greatest of virtues. Investors, then, head into 2026 in the best of standing with the only religion that matters in the here and now, having driven Wall Street’s most famous sentiment metric over the boundary beyond which the mood’s best described as “greedy.”
Earlier this month, I took readers on a snarky tour of BofA’s new and improved Bull & Bear Indicator, which was “revamped” such that consistently middling readouts amid plainly ebullient sentiment reflected more potential peril than the legacy version of the metric. As the figure on the left, above, shows, that indicator is now back above the contrarian “sell” line, at a nosebleed 8.5.
The proximate cause of the week-to-week increase (from an already high 7.8): A mammoth inflow into global equities. By “mammoth” I mean almost $100 billion, as a $145 billion inflow to equity ETFs tripled up a $46 billion outflow from active stock mutual funds.
In the final 2025 edition of his popular “Flow Show” series, BofA’s Michael Hartnett mentioned that “huge” (his word) inflow to equity ETFs as well as better global stock breadth and hedge funds trimming long VIX positions while editorializing around the “greed” warning from his cherished indicative metric.
The table above gives you a sense of what history has to say about the go-forward for global stocks when greed’s pervasive on the bank’s flagship sentiment gauge. The median decline for the above-mentioned MSCI gauge over two months is nearly 3%, and the hit rate’s pretty high.
If you’re curious, the median max three-month drawdown from 16 historical episodes of extreme greed looking back nearly a quarter century is -8.5%, while the median one-month foregone upside was a mere +1.7%. The implication being that the risk-reward from here’s asymmetric.
And yet, as Hartnett seemed to tacitly concede, the bear case is far from a slam dunk notwithstanding sundry well-worn AI bubble narratives and the beginnings of what I’ll politely call lender trepidation around speculative data center buildouts.
He cited Fed liquidity management, low oil prices and Donald Trump’s politically imperative quest to “improve affordability” in suggesting that inflation could surprise lower early next year. Hartnett also noted (and this is important) that “employers not employees are in charge of the US labor market for the first time since COVID.” All of those factors, he wrote, point to lower inflation, lower yields and a weaker dollar.
For their part, BofA’s “not chasing the risk-on consensus.” There are other, better ways of playing for lower inflation than piling into richly-priced risk assets, the bank suggested.
Maybe so, but coming full circle, greed’s been good to investors. The S&P’s on track to close out 2025 with a 16% gain on the heels of a 25% gain in 2024 and a 26% gain in 2023.
“We live not in the Anthropocene, but rather the Capitalocene.”
I LOVE this start to an amazingly concise, descriptive paragraph. To add my own snark to it:
Add in some BS to get Capitalobscene
Life is a game. Step 1 is to figure out how that game works. Step 2 is to figure out what you want from the game- keeping in mind that you want to preserve your sanity. Step 3 is to figure out how you can use the game to achieve your objectives without getting destroyed by the game. Hopefully, you achieve some enjoyment, fulfillment and “low-stress” years/decades in there. Step 4: then you die.
GLTA.
Exactly. My wife and I did just this to the benefit of ourselves many others. Sadly, my wife’s gone and I’m getting there (I hope) so I hope my daughter and her family figure out the puzzle.
I’ll add on something that I’ve wrestled with and eventually had to submit as a thought exercise to other cynical intellects: You may not like the game, you may see it and loathe it as a construct, but that doesn’t mean you don’t play it because in the end, we all have to eat. To quote Boiler Room, “Honor’s in the dollar, kid.”
Well, yes, but Boiler Room‘s about outright fraud, and while we’re on the subject, that film’s entirely unrealistic. Almost all of those operations are run by the mafia. And it’s not Ben Affleck in an Armani suit giving the motivational speech to new dupes, it’s Johnny Roastbeef’s 21-year-old half-nephew wearing a Fila track suit half-zipped with a white tank top underneath. If you say something stupid during the intro, you don’t get kicked out of an expensive leather chair in a nicely-appointed conference room, you get the pot of cheap, boiling Folgers sitting on a card table in the corner of what used to be the break room of a Great Clips thrown into your eyes. (“Anybody else got a problem with Webistics?!”)
There is a big disparity between the CNN Fear & Greed Indicator and the BofA B&B indicator. The fear and greed indicator is bouncing off a significant low and is close to neutral right now. It’s interesting that these two indicators can be so far apart.
The logical conclusion of capitalism is the complete exhaustion of the Earth’s natural resources.
I use NYMO and NAMO instead of bull bear. The real tension I am wrestling with is between “crack-up boom” and “vibepression.” Watching gold/copper and mid-curve to figure out what wins. The Kevins announcement will be clarifying to some degree. That Truflation is lower than CPI leans “vibepression.” We will see.