The Limits of Herd Behavior in Markets

Herd behavior and COVID Stock Market Crash

Bullish sentiment is still trading above its historical average though it has yet to test the 55 range again; a surge to the 60 range will probably indicate a short-term market top is in place.

The idiots behind the COVID hysteria are purposely making it appear that the mutations this virus is undergoing are novel. This virus is related to the flu. The flu has been here forever. It mutates every season, so what do these penguins masquerading as experts expect? Do they think the virus will lie down and drop dead? Like it’s relative to the flu, it’s going to mutate. It is unlikely there will be a vaccine that will have an efficacy rate of even 60%

Currency Markets: The race to the bottom

Before the COVID-19 hysteria, we stated that the Fed (and the top players) had decided to accelerate the currency race to the bottom. The objective was to finish last. The sad part is that only those oblivious to this ploy will lose, while the top players will make out like bandits. Who are the losers, the masses, of course? Think of it like this, before the currency is deflated, you might have 100 bucks.

If one invests one’s funds in suitable investments, one will not be adversely impacted by currency devaluations. One can make a small fortune if one act’s wisely on this information. Let’s say that the current depreciation means that you would need 200 bucks today to equal the 100 bucks you had yesterday, but instead, you have 1000 dollars.

You see the ploy here; the top players know that while debasing the currency is wrong, it’s not bad for everyone. It’s terrible for those who believe their governments will take care of them. This is why the poor get poorer and the rich get richer; it’s elementary, as Sherlock Holmes would say.

When Herd Mentality Meets COVID: The Stock Market’s Wild Ride

The COVID pandemic shall propel two trends aggressively: hyper-driving the printing press and embracing AI at a faster pace. Money is being created left, right, and centre and nobody is grumbling about it. As we predicted, the masses would one day plead for more and more, and now they stand in line, hoping for more after each stimulus is approved. The second trend, accelerating the adoption of AI, is being pushed because it will speed up the universal salary trend and the elimination of most jobs. When a person is paid to do nothing, they desperately search for meaning, leading them to virtual reality and drugs.

The Shocking Consequences of the COVID Pandemic: AI and Drug Legalization

Observe how quickly marijuana is becoming legal. The next wave of drugs to be legalized will be psychotropic drugs. As drugs and VR technology advance rapidly, the average person will be hooked into zombie land and fed through tubes. Payment for these services will be automatically deducted from their accounts through the universal income program.

Finally, there will be tombs with people plugged in 24/7, never wanting to leave the VR world. If unplugged, they will be so depressed and jaded that they will demand to be plugged back in. It will resemble the Matrix (the movie), except this time, people will line up voluntarily to embrace a world where they can be kings, queens, movie stars, etc.

It may sound like a fantasy, but brace yourself for Augmented Reality technologies to experience a massive breakthrough suddenly. This breakthrough will be so colossal that the average person will be unable to distinguish between reality and fiction.

The Dangers of COVID-19 Accelerating AI and Drug Legalization

New pharmaceuticals shall soon hit the market and elevate one’s sensory faculties to such an extent that individuals who ingest these substances will no longer be inclined towards a conventional relationship. Ironically, these advancements will serve as the most effective form of population control known to man. Technology shall herald the commencement of the peak population cycle, and the world’s population will continue to dwindle for at least six decades- more on this in forthcoming updates.

The Anxiety index remains unchanged, whilst a notable upswing is observed in the number of individuals occupying the neutral camp. This indicates that a significant portion of traders are currently unsure about the direction of the markets, which is rather promising news. When the markets undergo a sell-off, the dim-witted traders shall be the first to scurry and dispose of their holdings. At the same time, the astute investors will observe and anticipate the rise of fear levels, following which they shall make their purchases.

The Masses follow a predictable path

It is disheartening to witness the masses reacting predictably, year after year, decade after decade, and millennium after millennium. Nothing seems to change. Given the rapidly accelerating pace of boom and bust cycles, one would expect the masses to catch on, but they shall not. The voice of fear continues to resonate with them, and they remain oblivious to the fact that fear is an illusion. As a result, they shall be rewarded with nothing but an empty and rusty can.

Conclusion

The markets will likely reach their zenith when bullish sentiment surges to 60. At that juncture, the Dow and Nasdaq could discard 15 to 19% of their weight. Currently, there is no indication of a trend reversal. Therefore, unless one occurs, the Dow falling over 1500 points should be a cause for celebration.

On the weekly charts, the MACDs have recently experienced another bullish crossover. This development is expected to lead to a trial of the 1300 to 1350 ranges, with a potential overshoot to 1450. If the Nasdaq reaches beyond 1350 on this upward climb, the possibility of a significant correction will soar to the 70% range. A correction of 15% to 19% is more probable than one ranging from 9 to 11%.

In the upcoming update, we will discuss some of the significant trends for 2021. However, two trends that will gain momentum in the West are the loss of freedom and heightened polarization levels, particularly in America.

How Herd Behavior Continues to Influence the Stock Market in 2023

As the world continues to navigate unprecedented economic conditions, herd behavior in the financial markets has become an increasingly relevant topic. With the rise of social media and the ease of access to information, the impact of herd behavior on market trends has become more pronounced than ever before.

It is essential to keep a level head and not let fear or anxiety control your investment decisions. Understanding crowd behaviour is crucial to successful stock investing. Herd behaviour, overconfidence bias, availability bias, sunk cost fallacy, and confirmation bias are all psychological factors that can impact investment decisions. To avoid these traps, investors should seek objective information and analysis, consult with financial professionals, and consider passive investment strategies.

It is also essential to focus on the present moment

Stay calm in the face of uncertainty. Worrying about events that are beyond our control often results in missed opportunities. Fearmongers should be viewed as sources of comedic entertainment rather than taken seriously.

In summary, understanding crowd behaviour is essential for successful stock investing. By avoiding psychological biases and staying informed, investors can use mass psychology to their advantage and make informed decisions. It is important to stay focused on the present moment and not let fear or anxiety control investment decisions.

Research on the dangers of Following the Herd

These sources highlight the importance of independent thinking and avoiding the temptations of herd behavior in the investing world.

“The Intelligent Investor” by Benjamin Graham – This book, widely considered the bible of value investing, warns against following the crowd and advocates for a disciplined, long-term investment approach.
“Extraordinary Popular Delusions and the Madness of Crowds” by Charles Mackay – This classic book discusses historical examples of crowd behavior and how it can lead to financial ruin.
“The Crowd: A Study of the Popular Mind” by Gustave Le Bon explores the psychology of crowds and how individuals can lose their rationality and independence when they are part of a group.
“The Wisdom of Crowds” by James Surowiecki – While this book argues that crowds can be wise under certain conditions, it also acknowledges that groupthink and herding can lead to bad decisions.
“Why Most Investors Are Like Teenage Drivers” by Jason Zweig – This Wall Street Journal article argues that most investors follow the herd and make the same mistakes, leading to poor investment performance.

Articles that support the articles Herd mentality hypothesis

These resources provide valuable insights into the negative consequences of herd behavior regarding investing.

“Why following the herd can be bad for your investment” by CNBC – https://www.cnbc.com/2018/08/16/why-following-the-herd-can-be-bad-for-your-investment.html
“The Dangers of Herd Behavior in Investing” by Investopedia – https://www.investopedia.com/articles/stocks/11/dangers-of-herd-behavior-in-investing.asp
“The Herd Mentality in Investing: Causes and Effects” by Journal of Behavioral Finance – https://www.tandfonline.com/doi/abs/10.1080/15427560.2019.1625231
“Herd behavior in financial markets” by The National Bureau of Economic Research – https://www.nber.org/system/files/working_papers/w9277/w9277.pdf
“The Perils of Following the Crowd in Investing” by The Wall Street Journal – https://www.wsj.com/articles/the-perils-of-following-the-crowd-in-investing-1515607236