Market Sentiment and Cycle Assessment Framework

The best contrarian opportunities do not appear randomly — they appear at predictable points in the sentiment cycle. Learning to measure where you are in that cycle is the skill that separates contrarian investing from contrarian speculation.

Why This Matters

Howard Marks built Oaktree Capital on the insight that markets cycle predictably between fear and greed, and that measuring the distance from each extreme is the most reliable way to identify superior risk/reward opportunities. This framework provides four measurable dimensions — investor positioning, narrative temperature, valuation extremes, and technical capitulation — that produce a composite sentiment score indicating where the current moment sits in the cycle.