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 ! !