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In Episode 79, we welcome Jason Goepfert, founder of SentimenTrader.\nPer usual, we start with Jason\u2019s background. It involves listening to margin calls, when \u201creal emotion\u201d would come out. Jason tells us anger and panic were what you would hear, and that people are not necessarily rational.\nThese experiences and others eventually led Jason to launch Sentimentrader which is, according to its website: \u201can independent investment research firm dedicated to the application of mass psychology to the financial markets\u2026 Our focus is not market timing per se, but rather risk management. That may be a distinction without a difference, but it's how we approach the markets. We study signs that suggest it is time to raise or lower market exposure as a function of risk relative to probable reward. It is all about risk-adjusted expectations given existing evidence.\u201d\nThe guys discuss some of the mechanics of Sentimentrader \u2013 the time-frames of the various models, the inputs, and how most people want just one indicator (but that\u2019s not the best way).\nMeb asks for an example of one of Jason\u2019s favorite indicators \u2013 it turns out to be the VIX, sometimes known as the market\u2019s \u201cfear gauge.\u201d As of the time of the podcast, the VIX is quite low. One might assume this means it\u2019s about to pop, but Jason tells us nothing works 100% of the time, with Meb noting it can stay low for a long while.\nMeb asks how investors \u2013 specifically long-term investors \u2013 should use indicators like the VIX. Should they pay attention at all? Jason tells us you can use these indicators for color.\nMeb throws in a funny aside about a \u201cseafood tower\u201d indicator \u2013 the idea being when times are bad, no one orders the seafood tower, but when times are good, towers are stacked at all the tables. And it just so happens, Meb recently had a meal out in which the table wanted a seafood tower\u2026as did at least three other tables at the restaurant that night.\nThe conversation bounces around a bit, with interesting back-and-forths about the AAII and Investor Intelligence surveys, the potential for \u201cobserver effect\u201d to be skewing some results, and how every bull/bear cycle is different and people put too much weight on the market event that\u2019s just happened. Jason tells us that many investors are now saying, \u201cwell, stocks probably aren\u2019t going to peak because we\u2019re not seeing the same kind of optimism we saw in 2007.\u201d But 2007 was probably a once-in-a-lifetime type of a peak (and 2009 was a once-in-a-lifetime type of a bottom) \u2013 so we shouldn\u2019t expect to see the same readings at those turning points.\nThe guys breeze through a fun topic next: whether Twitter should be considered a useful sentiment indicator. Jason tells us it\u2019s wonderful and horrible. The problem is we self-select and tend to follow people with a similar mentality as our own. So, we\u2019re largely just in a bit of an echo chamber of our own opinion.\xa0\nThere\u2019s tons more in this great episode: how today\u2019s cryptos are resembling the internet stocks of the late 90s\u2026 why it\u2019s hard to buy, even when the sentiment indicators are signaling you should do so\u2026 and the time when sentiment called the markets nearly perfectly.\nAnd of course, there\u2019s Jason\u2019s most memorable trade. It involves a times when all the sentiment indicators were lining up together nearly perfectly. So Jason went in big\u2026and lost big when things didn\u2019t play out as he expected.\nWhat are the details? Find out in Episode 79.\nLearn more about your ad choices. Visit megaphone.fm/adchoices