It is not difficult to appreciate why is it that the collective mind of the market often seems to make more balanced, DISPASSIONATE THREAT ASSESSMENTS. Individuals have reasons for romanticising the past while feeling anxious about the future.
This is the reason why the market as a whole is more rational and objective than individual investors, who may be influenced by emotions such as greed, fear, or nostalgia.
Some possible examples to illustrate this are:
– When a company reports earnings that are lower than expected, some individual investors may panic and sell their shares, while others may hold on to them out of loyalty or hope. The market, however, may react more calmly and adjust the price based on the company’s fundamentals and future prospects.
– When a new technology or innovation emerges, some individual investors may get excited and buy stocks that are related to it, while others may be skeptical or indifferent. The market, however, may evaluate the potential impact and risks of the new technology or innovation more objectively and allocate resources accordingly.
– When a global crisis or event occurs, some individual investors may overreact and withdraw from the market, while others may ignore or downplay the situation. The market, however, may assess the severity and implications of the crisis or event more accurately and respond appropriately.