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There’s an old saying on Wall Street that I’ve always loved.
The stock market is the only place where people run out of the store when everything goes on sale.
And judging by what we’ve witnessed this week, investors are heading for the exits.
Technology stocks have been hammered. Some of the biggest winners of the artificial intelligence revolution have suffered sharp declines. And Wall Street’s favorite fear gauge just experienced one of its biggest single-day spikes in over a year.
But here’s what I find fascinating.
Corporate earnings are booming. AI spending is accelerating. And investors are acting like the entire economic expansion is about to collapse.
Something doesn’t add up.
I believe the pendulum has swung too far toward fear. And while I can’t tell you the exact day stocks will bottom, I think we’re getting very close to an attractive short-term buying opportunity.
Let’s start with the CBOE Volatility Index (VIX), better known as Wall Street’s fear gauge.
The VIX measures the volatility investors expect in the S&P 500 over the next 30 days. When uncertainty rises, investors rush to purchase options for protection, pushing the index higher.
On Thursday, the VIX surged as much as 68%, its biggest one-day jump since April 2025, reaching levels not seen in months.
That’s a remarkable shift in investor psychology.
And it’s not happening in isolation.
The American Association of Individual Investors’ (AAII) latest available sentiment survey showed 48.4% of investors were bearish, compared with a historical average of just 31.5%.
Meanwhile, CNN’s Fear & Greed Index plunged into Extreme Fear territory earlier this week, reaching 20 on Monday.
These are the kinds of readings that get my attention.
Why?
Because markets have a habit of bottoming when investors are convinced things will only get worse.
Extreme pessimism doesn’t guarantee an immediate rebound. Fear can always intensify, and volatility spikes sometimes precede further declines.
But historically, sharp increases in fear have often appeared near important turning points.
And I believe we’re approaching one.
Now let’s compare that fear with what’s actually happening inside corporate America.
According to FactSet’s October 30 Earnings Insight report, third-quarter earnings for S&P 500 companies were growing an incredible 30.2% year over year.
Even more impressive, 82% of companies reporting results had beaten analysts’ earnings expectations.
Think about that.
We’re experiencing one of the strongest earnings seasons in years, yet investors are suddenly questioning whether the bull market is finished.
That doesn’t mean every company is thriving. Some businesses are struggling with higher costs, slowing demand, or disappointing guidance.
And there are legitimate concerns about how quickly AI investments will generate profits.
But the broader earnings picture looks considerably healthier than the recent market action suggests.
That’s an important distinction.
Stock prices can change overnight. Business fundamentals usually don’t.
Of course, there’s another elephant in the room.
Tuesday’s midterm elections delivered a Democratic blue wave, with the party winning control of both chambers of Congress.
Some investors immediately began worrying that increased regulation, tougher data-center restrictions, and greater scrutiny of Big Tech could derail the AI boom.
Those concerns aren’t imaginary. New regulations and local opposition to data centers could delay projects and raise costs.
But here’s my question.
Did Tuesday’s election suddenly eliminate the need for AI?
Did Microsoft (MSFT), Amazon (AMZN), Google (GOOG), and Meta (META) wake up Wednesday morning and decide they no longer need more computing power?
Of course not.
The demand for AI chips, networking equipment, power infrastructure, and advanced data centers isn’t driven by which political party controls Congress.
It’s driven by a technological transformation that’s already reshaping the global economy.
And that transformation is still in its early stages.
As I’ve said before, I believe this is 1995, not 1999.
There will be corrections. There will be overvalued stocks. And there will be companies that fail to justify the billions being invested.
But I don’t believe the AI revolution ended on election night.
When markets sell off this sharply, my instinct isn’t to panic.
It’s to start looking for opportunities.
I’m focusing on high-quality companies with strong earnings, healthy balance sheets, and exposure to the long-term innovation trends I believe will define the next decade.
I’m also being selective. Not every beaten-down stock is a bargain, and there’s no reason to deploy all your available cash in one afternoon.
Buying in stages, keeping some cash available, and focusing on fundamentals makes far more sense than trying to predict the precise bottom.
Could stocks fall further next week? Absolutely.
But my view is that we’re much closer to a short-term bottom than the beginning of a prolonged bear market.
The pendulum has swung from excitement to fear remarkably fast.
And if history teaches us anything, it’s that the best opportunities rarely arrive when everyone feels comfortable.
They arrive when the headlines are frightening, the crowd is selling, and the long-term opportunity remains intact.
