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 — 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 — is money flooding in?
- Are analysts raising price targets aggressively?
- Insider selling patterns — 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 — 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 — 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"?
❌ Absolutely not! Important distinction:

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

✅ Key: Confirm fundamentals first, then assess sentiment, then decide to buy

Usage Tips

How to use this prompt to find contrarian opportunities?
Two scenarios:

📉 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

📈 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

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Never Lose Money

Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1.

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When to Sell

When the facts change, I change my mind. What do you do, sir?

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Wonderful 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.

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Admit Mistakes

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Courage to Act

Have the courage to act when opportunity presents itself. Hesitation leads to missed opportunities.

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Circle 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.

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Gradual 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.

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Insist 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.

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Dollar 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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