Devlog #2 – How fear and greed affect the market

Hi! This is 57dev. Today, I'll briefly discuss where fear and greed come from in the markets and how my Fear vs Greed index affects the behavior of the world in the Investment Fund Game. In the game, it is represented by a simple indicator ranging from 0 to 100.

Where do fear and greed come from?

Fear arises when something unpleasant or uncertain happens: poor company results, bad news, sudden declines. We fear loss → we sell.

Greed grows when things are looking good for a long time: good news, day after day increases. We are afraid that we will “miss out on an opportunity” → we buy. How does the index works in the game?

The index is influenced by the pace of declines/increases, how many sectors are moving in the same direction, the tone of the news, and the behavior of AI funds. When the index changes, so does price behavior, volatility, and investors' preferences. When GREED dominates:

• Stocks: long-term growth, led by “fast” sectors (e.g. technology), less volatility, risk of a bubble is growing.

• Commodities: energy/industrial metals more often up, gold usually weaker.

• Bonds: fewer buyers, yields rising ⇒ prices falling.

What to do in the game? At the beginning, it is usually worth joining the trend, but later don't oversize your positions, rebalance, have a hedge plan for a sudden reversal. Steam post image

When FEAR rules the market:

• Stocks: widespread declines, high volatility, initial rebounds can be misleading.

• Commodities: gold tends to rise (safe haven), oil/gas fluctuate sharply in response to news.

• Bonds: capital flees to debt, yields fall ⇒ prices rise.

What to do in the game? At the beginning, reduce positions, consider hedging, add bonds/cash, wait for stabilization. Buy later when others are afraid. Steam post image Like what you read? Wishlist on Steam to get updates and learn more. Thanks for reading, 57dev