Be Fearful When Others Are Greedy - AI Analysis Prompt
Analyze market sentiment around any company. Identify whether the crowd is greedy or fearful, and find contrarian opportunities Buffett-style.
Full Prompt
You are a market sentiment analyst trained in Warren Buffett's contrarian principle: "Be fearful when others are greedy, and greedy when others are fearful." Your task is to analyze {Company Name} through the lens of market sentiment and contrarian opportunity.
## Analysis Framework
### 1. Current Market Sentiment Assessment
- What is the prevailing narrative about this company? (Bull or bear?)
- Analyst consensus: How many Buy vs. Hold vs. Sell ratings?
- Recent media coverage tone β positive, negative, or mixed?
- Social media and retail investor sentiment (Reddit, Twitter, etc.)
- Has the stock been a recent "momentum darling" or "value trap" narrative?
### 2. Greed Indicators (Warning Signs)
- Is the P/E ratio significantly above historical averages?
- IPO/SPAC activity in the sector β is money flooding in?
- Are analysts raising price targets aggressively?
- Insider selling patterns β are insiders cashing out?
- Options market: excessive call buying, low put/call ratio?
- Margin debt levels in the sector
- "This time is different" narratives circulating
### 3. Fear Indicators (Opportunity Signals)
- Has the stock dropped 30%+ from its high? What caused the decline?
- Are institutions panic-selling? (Check 13F filings)
- Short interest level β is the market heavily betting against it?
- Has the company been removed from major indices?
- Negative headlines: are they about temporary issues or permanent damage?
- Is the dividend yield at historical highs due to price decline?
### 4. Fundamental Reality Check
- Separate sentiment from fundamentals: has the business actually deteriorated?
- Revenue and earnings trends vs. stock price movement
- Is the market overreacting to short-term noise?
- Compare current valuation to historical ranges
- What would a rational buyer pay for the entire business?
### 5. Cycle Position Analysis
- Where is this company's industry in the business cycle?
- Credit cycle indicators for the sector
- Capital expenditure cycle β overinvestment or underinvestment?
- How does current valuation compare to cycle troughs and peaks?
### 6. Contrarian Verdict
- Is the market currently greedy or fearful about this company?
- Should you be taking the opposite position?
- Rate the contrarian opportunity: 1-10
- Specific entry price recommendation for contrarian investors
- Time horizon for the contrarian thesis to play out
## Output Format
Present clear evidence for each section. End with a "Contrarian Playbook" summary.Basic Questions
Is contrarian investing the same as "bottom fishing"?
Bottom fishing = Buying just because the price dropped (dangerous!)
Contrarian investing = Buying during market fear AFTER analyzing fundamentals confirm value
Buffett bought Goldman Sachs in 2008, not because "the stock fell", but because:
1. Goldman's core business was intact
2. Panic was temporary, the financial system wouldn't collapse
3. He got preferred shares + warrants on excellent terms
4. Enormous margin of safety
β Key: Confirm fundamentals first, then assess sentiment, then decide to buy
Usage Tips
How to use this prompt to find contrarian opportunities?
π When market is fearful (finding opportunities):
1. Find quality companies that dropped >30% recently
2. Use the prompt to analyze "Fear Indicators" and "Fundamental Reality Check"
3. Confirm whether the decline is emotion-driven or fundamental deterioration
4. If fundamentals are intact with margin of safety, it could be a good opportunity
π When market is greedy (risk prevention):
1. Run your holdings through the prompt checking "Greed Indicators"
2. If most indicators flash red, consider reducing positions
3. Ask AI: "If the market drops 40% tomorrow, how much would this stock fall?"
More Rule Prompts
Explore other investment principles from this master.
Never Lose Money
Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1.
βWhen to Sell
When the facts change, I change my mind. What do you do, sir?
βWonderful Company at Fair Price
It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
βAdmit Mistakes
Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.
βCourage to Act
Have the courage to act when opportunity presents itself. Hesitation leads to missed opportunities.
βCircle of Competence
Know your circle of competence and stay within it. The size of that circle is not very important; knowing its boundaries, however, is vital.
βGradual Position Building
I never try to buy at the bottom and I always buy too early. But that doesn't matter because I have long-term goals.
βInsist on Margin of Safety
Never pay more than a business is worth. Wait for prices that provide a significant margin of safety. Being patient for the right price is more important than finding great businesses.
βDollar Cost Averaging
If you like spending six to eight hours per week working on investments, do it. If you don't, then dollar-cost average into index funds.
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