How to Succeed in Investing: Follow the Herd… Then Stampede the Other Way
May 12, 2025
Introduction: Mass Delusion is Your Best Signal
Linear thinking is the pandemic that infects almost every investor you’ll meet. They plot points A to B as if markets move along train tracks rather than through multidimensional vector fields. They speak of “uptrends” and “downtrends” as though price were the only variable that matters. They’re fighting tomorrow’s war with yesterday’s weapons, and wondering why they keep losing.
The truth? Markets don’t move in lines. They move in vectors—complex forces with direction and magnitude, influenced by psychological currents, narrative momentum, liquidity flows, and dozens of other forces simultaneously. When these vectors align, they create the illusion of predictability. When they conflict, we get what most call “volatility,” but it’s the natural state of a complex adaptive system resolving multiple tensions.
The Delusion of Linear Progression
The conventional investing narrative unfolds predictably: study fundamentals, identify value, buy low, sell high, and repeat. It’s a comforting fairy tale that ignores the vector reality of markets. If investing were this straightforward, the success rate would be dramatically higher than the dismal 20% of professional fund managers who outperform their benchmarks over a decade.
What’s happening beneath the surface? Multiple vector forces operating simultaneously:
- Narrative vectors: The stories we tell about assets, creating directional psychological momentum
- Liquidity vectors: The flow of capital seeking returns, amplified by leverage
- Technical vectors: The self-reinforcing patterns created by algorithmic responses
- Sentiment vectors: The emotional currents that accelerate or dampen price movements
These vectors don’t merely add up—they multiply, divide, and transform each other through nonlinear interactions. A narrative vector can suddenly amplify a technical vector through a liquidity cascade, creating exponential rather than linear movement.
Mass Delusion: The Ultimate Edge
Here’s where most investors get it catastrophically wrong: they assume mass delusion is something to avoid. It’s the most powerful signal in your arsenal—if you know how to read it.
Mass delusion isn’t an aberration in markets; it’s their natural state. Markets aren’t prediction machines; they’re narrative coordination mechanisms. They don’t discover truth; they manufacture temporary consensus. This isn’t a bug—it’s the operating system.
Consider the dotcom bubble. The conventional view labels it a “irrational exuberance” period followed by a “return to fundamentals.” This linear narrative misses the vector dynamics at work. What happened was a powerful narrative vector (“the internet changes everything”) collided with a liquidity vector (loose monetary policy) to create a self-reinforcing pattern. The delusion wasn’t that the internet would transform business—it did—but that the transformation would happen simultaneously, benefiting every company with “.com” in its name.
The vector-thinking investor didn’t avoid the bubble—they rode it up, recognising its momentum while simultaneously tracking the growing divergence between narrative and reality vectors. They exited not when some imaginary “fundamental value” was reached, but when the narrative vector began losing magnitude while counterforces gained strength.
The Geometry of Market Movement
Markets don’t exist in Euclidean space. They operate in what mathematicians call a manifold—a space that locally resembles Euclidean space but globally may be curved, twisted, or folded in ways that create surprising connections and discontinuities.
This isn’t abstract theory; it’s practical reality. Why do markets occasionally experience flash crashes that seem to defy explanation? Because the manifold of price action contains hidden folds where seemingly distant points suddenly become adjacent. These topological features create what technical analysts cryptically call “support” and “resistance”—points where price action behaves differently than expected.
Vector analysis reveals what’s happening: when multiple market vectors converge at critical points on this manifold, we get explosive moves that appear “unpredictable” to linear thinkers but are visible in advance to those tracking vector alignments. The March 2020 COVID crash wasn’t a Black Swan—multiple vectors suddenly aligning in the same direction, creating overwhelming momentum that no individual force could counteract.
Bayesian Vectors and Premise Shifts
Most investors use new information to update their models—classic Bayesian thinking. This is necessary but insufficient. The vector investor does something more powerful: they watch for premise shifts that invalidate entire models.
A premise shift occurs when a fundamental assumption about how markets work changes. The 2008 financial crisis represented a paradigm shift in how housing credit was understood, and the 2021 meme stock phenomenon represented a paradigm shift in how retail participation influences markets. In both cases, investors who merely updated their existing models were decimated. Those who recognised the vector shift in the underlying premises survived and thrived.
This explains why experienced fund managers often underperform during regime changes—they update their models when they should question their premises. Their experience becomes a liability rather than an asset when the vector field transforms.
Mass Psychology: The Force Multiplier
Mass psychology doesn’t just influence markets—it is the market. Price is merely the visible manifestation of invisible psychological currents. Vector analysis allows us to decompose these currents into measurable components:
- Fear Vector: Creates rapid directional force away from assets
- Greed Vector: Creates a slower but more persistent force toward assets
- Narrative Vector: Amplifies or dampens the above forces through storytelling
- Contrarian Vector: Creates counterforce proportional to consensus strength
The interplay of these vectors explains why markets spend most of their time grinding higher (greed is persistent) but crash quickly (fear is intense). It explains why assets can remain “overvalued” for years (narrative amplifying greed) and why the most hated assets often deliver the best returns (contrarian vector overwhelming fear).
The vector investor doesn’t fight these psychological currents—they map, measure, and navigate them. When 92% of analysts rate a stock “buy,” they don’t see confirmation; they see an exhausted positive vector with limited remaining magnitude and growing contrarian counterforce.
Technical Analysis: Vector Visualisation
Technical analysis isn’t about patterns; it’s about vector visualisation. Chart patterns don’t “predict” the future; they map the current vector field of psychological forces acting on an asset. A head-and-shoulders pattern isn’t magical; it’s a visual representation of enthusiasm (first peak), attempted recovery (second peak), and exhaustion (failure at the neckline).
Volume isn’t just activity; it’s vector magnitude. Price isn’t just value; it’s a vector direction. Their interaction creates momentum—a second-order vector that measures the rate of change in the primary price-volume vector.
The most successful technical traders aren’t looking for patterns; they’re measuring vector changes—moments when magnitude increases while direction remains constant (continuation) or when direction changes while magnitude remains high (reversal). These vector transitions occur before price action confirms them, creating the edge that pattern-matching alone can never provide.
Practical Application: The Vector Portfolio
How does this translate to practical investing? Stop thinking about positions and start thinking about exposures to specific vectors:
- Are you overexposed to the momentum vector? This works until regime shifts occur.
- Are you overexposed to the value vector? This works until narrative forces overwhelm fundamentals.
- Are you overexposed to the consensus vector? This works until it suddenly doesn’t.
The vector investor maintains balance not through asset classes but through vector exposures, ensuring that no single market force can devastate their portfolio. They embrace certain mass delusions while hedging against others. They recognise that correctness isn’t binary but probabilistic across multiple timeframes.
When meme stocks exploded in 2021, linear thinkers were paralysed, unable to reconcile “irrational” price action with “fundamental” value. Vector thinkers saw something different: a new force vector (coordinated retail sentiment) entering the system with sufficient magnitude to overwhelm traditional vectors temporarily. They didn’t have to believe in the narrative to respect its vector force.
The Meta-Game of Investing
The final level of vector thinking transcends individual assets and markets to consider the meta-game—the game being played around the game. Central banks aren’t merely setting interest rates; they’re attempting to simultaneously manipulate narrative, liquidity, and sentiment vectors. Regulations aren’t just rules but vector redirections that change how capital flows through the system.
The most sophisticated investors aren’t playing the object-level game of picking stocks or timing markets. They’re playing the meta-game of identifying which vectors are being artificially suppressed or amplified, and positioning accordingly. They ask not “What will this asset do?” but “What vectors are acting upon all assets, and how are they changing?”
Conclusion: Embracing Vector Complexity
Success in investing doesn’t come from prediction—it comes from navigation. The vector investor doesn’t know where markets are going; they know what forces are acting upon them and how to position themselves within the field.
Mass delusion isn’t something to avoid—it’s something to understand, measure, and sometimes embrace. The greatest returns don’t come from being right when everyone is wrong; they come from understanding why everyone is bad, how long they’ll likely remain bad, and how to calibrate your exposure to their eventual recognition of reality.
Stop thinking in lines. Start thinking in vectors. And remember that in a complex adaptive system like markets, the delusion of the masses isn’t a bug—it’s the most reliable feature you can trade.
