In his latest column for MarketWatch, newsletter-watcher Mark Hulbert of Hulbert Financial Digest makes an interesting observation about fear and contrarian investing, one that echoes the findings of one of the great gurus we follow, Martin Zweig.

Writing about the recent Las Vegas Money Show, Hulbert says that sentiment among the conference’s presenters was decidedly conservative and measured. “More often than not, they devoted their talks and workshops to managing risk and avoiding further losses rather than how to make a killing,” he said, citing presentations with titles such as “Five Time-Tested Secrets for ‘Safety-First’ Investing”; “Finding Companies for a Slow Growth Environment”; and “Managing Portfolio Risk with Cash: A New Perspective”.

“And that,” Hulbert says of the muted sentiment, “from a contrarian point of view, is an encouraging sign,”

Hulbert says the inspiration for using the Money Show sentiment as a market indicator comes from Martin Zweig, the growth stock great whose strategy forms the basis for one of my Guru Strategies. Zweig, Hulbert notes, paid close attention to the sentiment among newsletter ads in Barron’s. “He reasoned that, whatever else you might want to say about newsletter advertisers, they are incredibly sensitive to which way the wind is blowing among individual investors,” Hulbert wrote. “If the pendulum that swings between greed and fear is closer to the former, then newsletter ads will brag about the editors’ successes in helping you get rich quickly. When the pendulum swings to fear, in contrast, capital preservation strategies will be what sell investment products. Newsletter advertisers then will boast about how their clients can reduce risk and help us sleep better at night.”

In the latter stages of the 1973-74 bear market, for example, Hulbert says there were weeks when Zweig found no bullish newsletter ads at all in Barron’s. “Not one. That’s the hallmark of a bear-market bottom, according to contrarians.”

Hulbert acknowledges that his measurement of Money Show sentiment is by no means a silver bullet. “Of course, the mood at this week’s Las Vegas investment conference constitutes just one straw in the wind,” he said. “Other sentiment indicators will also need to fall into place before contrarians are ready to flash the all-clear signal. But it is encouraging that the bear market that began 18 months ago has at least succeeded in replacing a good chunk of the greed that used to prevail with fear.”