you keep coming back for more lessons. I like a studious...

you keep coming back for more lessons. I like a studious audience.

Fear and Greed drive markets. Nothing else.

The reasons you should buy stocks based on fundamentals is so you have the best chance of buying quality. Quality should hold up better than a badly managed or weak balance sheet company. As an example look at STO price action over the last 5 years compared to WPL. WPL had fantastic discipline in not over leveraging during cheap credit markets. As oil dumped, WPL outperformed almost all other energy stocks. STO showed no discipline and leveraged to the hilt with 'cheap' debt during the 2010~2012 oil boom. The market rewarded quality (WPL) , and punished weak balance sheet (STO). It does not mean you are protected from fear when markets become fearful, but you should hold up better than others.

The reverse is also true. A weak stock that has been overly punisihed due to Fear, will likely rally harder than a well run company during Greed times. So, looking at STO & WOR over the last month, they have both outperformed the 'better' companies - due to perhaps being (more) over sold. Once that rally brings them back in line with their sturdier couterparts, the risk of holding them returns, and risk/reward profiles suggest a move into the 'better' companies is warranted. Hence, we are seeing that now.