The Limits of Herd Behavior in Markets

Herd Behavior and COVID Stock Market Crash

Updated March 2023

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 grumbles 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 eliminate 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 cannot 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, 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 will 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 navigates unprecedented economic conditions, herd behavior in the financial markets has become increasingly relevant. 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 behavior, 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 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 essential to stay focused on the present moment and not let fear or anxiety control investment decisions.

Frequently Asked Questions – Herd Behavior and the COVID Stock Market Crash

Q: What is herd behaviour in the stock market?
A: Herd behavior refers to individuals’ tendency to follow a larger group’s actions and decisions, often leading to irrational or exaggerated market movements.

Q: How does herd behavior impact the stock market during a crisis like COVID?
A: During a crisis, herd behavior can intensify as fear and uncertainty grip the market. Investors may rush to sell or buy stocks based on the actions of others, amplifying market volatility.

Q: What role does bullish sentiment play in a market analysis?
A: Bullish sentiment reflects investors’ optimism and positive outlook towards the market. Monitoring bullish sentiment levels can provide insights into market trends and potential turning points.

Q: Why is it important to differentiate between long-term market projections and short-term resistance levels?
A: Long-term market projections help investors understand the market’s overall direction, while short-term resistance levels indicate potential barriers to upward movement. Differentiating between the two helps in making informed investment decisions.

Q: How can investors navigate the stock market during uncertain times?

A: Investors should avoid being influenced by herd behaviour and base their decisions on objective analysis and information. Consulting with financial professionals and considering passive investment strategies can also be beneficial.

Q: What is the impact of currency devaluation on investments?
A: Currency devaluation can affect investments, as it may erode purchasing power and affect the value of assets denominated in that currency. Diversifying investments across different currencies and considering suitable investments can mitigate these effects.

Q: How does the COVID pandemic accelerate trends like AI adoption and drug legalization?
A: The COVID pandemic has led to increased adoption of technologies like AI and the legalization of certain drugs. These trends can impact various industries, job markets, and population dynamics.

Q: How can investors avoid falling into common psychological biases?
A: Investors should be aware of biases such as herd mentality, overconfidence, availability bias, sunk cost fallacy, and confirmation bias. Seeking objective information, consulting professionals, and considering passive investment strategies can help mitigate these biases.

Q: What is the significance of bullish sentiment reaching specific ranges?
A: Bullish sentiment reaching specific ranges can indicate potential market tops or turning points. Monitoring these levels can provide insights into market sentiment and possible market reversals.

Q: How can investors make informed decisions amidst heightened polarization and loss of freedom?
A: Amidst societal challenges, investors should stay informed and objective, focusing on the present moment rather than getting swayed by external factors. Making decisions based on reliable information and avoiding fear-driven narratives is crucial.

Originally published on April 26, 2021, and subsequently updated in March 2023, this article offers enhanced insights and analysis.