Newsletter Editor Says Wall Street’s “Smart Money” Is Still Scared — and That’s Bullish
Stock futures are under pressure as the final quarter of 2025 begins amid a government shutdown and fading hopes for this week’s jobs data. Whether that rattles the market remains to be seen, but history suggests investors shouldn’t be too worried.
Enter today’s call of the day from the anonymous author of Lord Fed’s Gazette, Substack’s 13th most popular finance blog. Known as “Lord Fed,” the investor argues that Wall Street’s big money is still too nervous — and that fear is fuel for more S&P 500 gains.
He’s earned some credibility. Back in August, Lord Fed predicted that the index hitting 6,500 would mark the start of another leg higher. By September, the S&P had delivered eight record closes for the month and 23 for the quarter.
But instead of chasing, hedge funds have flinched. As the S&P 500 edged near 6,700 on Sept. 23, Goldman Sachs data showed hedge funds dumping U.S. tech at the fastest pace since August — reversing weeks of steady buying. “They sat out the rally, finally dipped in, then cut exposure on the first wobble at new highs,” Lord Fed wrote.
This hesitation is the opposite of what he expected. Normally, he said, underperforming money managers eventually “capitulate” and pile into a rally, pushing it even higher. Instead, they’re treating every dip as the start of a correction.
To him, that’s a classic bull market setup: “They’re selling into strength at multiyear highs because they’re convinced this is the top. That’s not how tops form — that’s how bull markets extend. The longer they stay scared, the longer this market has room to run.”
The big risk, he notes, was always that stocks would run too far, too fast, leaving positioning overstretched. But instead, skepticism keeps adding “dry powder” for the next leg higher.
His target? 7,000 on the S&P 500. And after the latest round of selling, Lord Fed says the odds of hitting it are even stronger now than two weeks ago.
