It’s often said that Wall Street has only two emotions—fear and greed. Fear creates panic selling and drives markets down. Greed creates buying frenzies and drives markets up.
 
The proverb “Fear and greed move markets” (or “Greed and fear move markets”) is cited in print since only about 2000.
 
Who coined the “fear and greed” proverb? The bestselling book The Money Game (1968) by “Adam Smith” declared that “the strongest emotions in the marketplace are greed and fear.” In Harpers Magazine, May 1971, an unnamed New York broker said: “Downtown, there are two emotions: fear and greed. The rest is bullshit.” Many books and articles, however, credit Manhattan broker William M. LeFevre, who was quoted in Time magazine of May 1, 1978 saying: “There are only two emotions in Wall Street: fear and greed.” 
       
   
Google Books
The Money Game
By “Adam Smith” (George J. W. Goodman)
New York, NY: Random House
1968
Pp. 78-79:
The strongest emotions in the marketplace are greed and fear.
 
8 September 1968, Florence (SC) Morning News, “The Stock Game: What Makes Stock market Fluctuate?” by Phil Thomas (AP Business Writer), pg. 6A, cols. 6-7:
Joseph F. Dorsey, president of Argus Research Corp., has a theory that fear and greed play an active role in stock fluctuations.
 
“Extreme tops are caused by greed and extreme bottoms are caused by fear,” he said. “In between the market reflects the expected earnings outlook and the expected business outlook. These are the long-term trends.”
 
The partner in the private investment firms has a mental fear-greed scale he uses to gauge the market.
 
“It’s on a scale of 1 to 10,” he said, “with fear at 1 and greed at 10. This gives you a crisis at each end and in between you try to make a living.
 
“Fear is a flight to the dollar. People see the market start to go down and they get afraid that they aren’t going to lose just a little bit of the money they have invested but all of it. They cash in and that’s why the market has a big drop.
 
“Greed is a flight away from the dollar. People want to avoid inflation so they invest in the market. Prices start to rise and they get greedy. They pay more for stock than they should, assuming someone’s going to pay them more for it than they laid out.”
 
“Adam Smith” in his recent book, “The Money Game”, describes greed and fear as “the strongest emotions in the marketplace.”
   
“In rising markets, you can almost feel the greed tide begin. Usually it takes from six months to a year after the last market bottom to get started. The greedy itch begins when you see stocks move that you don’t own. Then friends of yours have a stock that has doubled; or, if you have one that has doubled, they have one that has tripled. This is what produces bull market tops. obviously no one rationally would want to buy at the top, an yet enough people do to produce a top. How do they manage it? It must be that element of contagion…the unwillingness to be out of step.”
 
“The same thing happens in reverse. No matter what role the investor has started with, in a climax on one side or the other, the role melts into the crowd role of greed or fear.”
 
Google Books
Superpower: A Portrait of America in the 1970’s
By Robert Hargreaves
New York, NY: St. Martin’s Press
1973
Pg. 117:
“Downtown, there are two emotions: fear and greed. The rest is bullshit.”
New York broker, quoted in Harpers Magazine, May 1971
     
Time magazine
The Wildest Week for Stocks
Monday, May. 01, 1978
“There are only two emotions in Wall Street: fear and greed. For most of 1977, we had an excess of fear. The last few days, greed has come back with a vengeance.” —William M. LeFevre, vice president of Granger & Co., Manhattan brokers
 
Google Groups: comp.sys.novell
Newsgroups: comp.sys.novell
From: .(JavaScript must be enabled to view this email address) (Fred Puhan)
Date: Tue, 21 Dec 1993 22:46:30
Local: Tues, Dec 21 1993 10:46 pm
Subject: OPEN LETTER TO RAY NOORDA - From anther user
 
Stockholders are constantly monitoring a company’s stock performance; “there are only two emotions on Wall Street—fear and greed.”
     
Google Groups: rec.humor
Newsgroups: rec.humor
From: .(JavaScript must be enabled to view this email address) (Joseph Douglas McLain)
Date: 1995/07/31
Subject: Call for One-Liners
 
There are only two emotions on Wall Street:  Fear and greed.
 
Google Groups: alt.astrology
Newsgroups: alt.astrology
From: Saskia Bosman
Date: 1997/03/11
Subject: The Stars Send You Abundance
   
These days, more and more people are getting aware that Stock-Exchanges like Wall Street operate by the same principles as the old chainletters and pyramid games. They operate by only two simple principles: greed and fear. Greed: prices go up, fear: prices go down. When greed rules the messages of the chain of newspapers, radio, t.v., mouth on mouth, internet, etc. is join, join, join, and prices go up. When fear rules the message of this chain of letters, press, etc is go, go, go now!
     
Google Groups: alt.religion.eckankar
Newsgroups: alt.religion.eckankar
From: Rich

Date: 2000/04/18
Subject: Time for Yoda
 
Greed and fear move markets. Long-term investors know that we don’t manage money. We manage ourselves. We manage greed fear pride and hope, we manage our sense of self-importance. Money is a blank screen onto which we project the contents of our souls. Then we treat those projections as if something other than ourselves is out there.
 
Forbes.com
Thoughts On The Business Of Life
Lydia Forbes, 07.24.00
(...)
There are only two emotions in Wall Street—fear and greed.—WILLIAM M. LEFEVRE
 
5 March 2001, Denver (CO) Post, “‘Money’ worth a look” by Joanne Ostrow (TV/Radio), pg. E3:
Apparently there’s an old joke in the business world: “There are only two emotions on Wall Street, fear and greed.” 
     
Google Books
Survival of the Savvy:
High-Integrity Political Tactics for Career and Company Success
By Rick Brandon and Marty Seldman
New York, NY: Simon and Schuster
2004
Pg. 215:
A Wall Street maxim is “Fear and greed move markets.”
   
Google Books
Islands in the Clickstream:
Reflections on Life in a Virtual World
By Richard Thieme
Published by Syngress
2004
Pg. 62:
Greed and fear move markets. Long-term investors know that we don’t manage money. We manage ourselves. We manage greed, fear, pride, and hope.
   
Google Books
The Practical Guide to Managing Nonprofit Assets
By William A. Schneider, Robert A. DiMeo, Michael S. Benoit & Associates
Hoboken, NJ: John Wiley and Sons
2005
Pg. 207:
Every Wall Street trader knows that “fear and greed move markets.” This stark reality, that human emotions are a major driver of the global financial markets, flies in the face of the “rational investor” assumptions rooted deep in Modern Portfolio Theory and the Efficient Market Hypothesis.
       
The Big Picture
A Better Sentiment Measure: DrKW’s Fear & Greed Index
Monday, February 13, 2006 | 05:45 AM
Small World:  On Saturday, I mentioned problems with Citibank’s Panic/Euphoria sentiment measure.
 
Then, I discussed the work of James Montier of Dresdner Kleinwort Wasserstein (DrKW) yesterday, (Seven Sins of Fund Management). This was the first time I ever mentioned him.
 
By coincidence, I read about a Fear/Greed indicator last night from the very same James Montier in Thoughts from the Frontline (which coincidentally references my earlier discussion of Northern Trust’s Paul Kasriel).  How’s that for convoluted circles?
   
The Big Picture
Fear & Greed Index
Tuesday, October 09, 2007 | 11:30 AM
James Montier’s was the Global Equity Strategist of Dresdner Kleinwort Wasserstein. (He will retains the same title of global equity strategist at Societe Generale) He developed a “Fear & Greed Index.”
 
He describes F&G as “a risk adjusted price momentum measure between global equities and global bonds. In the past it has served as a powerful contrarian indicator at a 12 month time horizon.”
 
Forbes.com
Time For Truth
Robert L. Dilenschneider
09.28.08, 12:48 PM ET
(...)
Set aside the old Wall Street paradigms about how to make money: fear and greed. Less greed and less fear will result in less uncertainty and more stability in the markets. That will begin to restore trust in the system.
   
Stock Traders Daily
Fear & Greed: The Premise for Capitulation & Overreaction
October 1, 2008
Fear and Greed are regularly embraced and exploited by professional traders.  At no time has this been more evident than in early September, 2008.  Professional traders, hedge fund managers, and specifically short sellers exploited the fear in the Market, and combined with seasonally low volume they were able to compound the result in their favor.