Markets – Fear and Greed

An uncontrollable fire, or a wild savage beast?

THE MARKET is the product of millions of people’s emotions. What financiers, portfolio managers, brokers, bankers, traders feel mainly is fear or greed – or a mix of both.

We would surely have a field day going through all the irrationality of herd mentality, but let’s just conclude that it was first put forward by 19th-century French social psychologists Gabriel Tarde and Gustave Le Bon, and studied still very tediously by Sigmund Freud, and Wilfred Trotter – whose book ‘Instincts of the Herd in Peace and War’ is a classic.

Interestingly and maybe tragically – No study, person nor historical event can properly explain the PURE IRRATIONALITY OF MARKET BEHAVIOR and the HERD MENTALITY driving it.

When FEAR AND GREED is combined WITH an IRRATIONAL HERD MENTALITY – there is no other outcome than:

BOOM OR BUST ! !

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3 thoughts on “Markets – Fear and Greed”

  1. Interestingly, our country seems to be moving in this herd mentality direction. There is no discussion and room for compromise. This creates a very dangerous precedent. Even if the early signs show “BOOM” (at least for Wall Street) cyclical patterns mandate we contend with a future “BUST” as well. 19.5+ trillion in debt, enormous outstanding college loans, meager GDP numbers and lots of promises from a new administration without a game plan explained to the public. This country has a serious “BALANCE” issue which is going to catch many off guard when the veracity and speed of negative change occurs.

    Liked by 1 person

    1. Thanks for your comment! You are probably right.
      Fact until know is that Trump initiation has got the stock market upwards, which is not uncommon in the beginning of a presidency your way. Maybe linked to his background in business, the general perception is that he is favorable towards Wall Street etc. But as you say – only after some time will we know better whether he can / will keep his agenda. He does not mind creating global tensions, but the future will show whether he is prepared to take tensions further and deal with the consequences, or whether it is only his style of rhetoric.
      In the beginning the public might think this confrontational style is exciting – until there is a serious escalation.

      Liked by 1 person

      1. I think your commentary is spot on! Hopefully the marches by his own citizens wear his ego down enough to get him to recognize his words can cause major unrest throughout the world. Being controversial and a bit of a wildcard leaving your adversaries in limbo is one thing. Causing countries with very different cultures and methods of dealing with overlapping interests to aggressively threaten world order is another.

        Liked by 1 person

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