Title: Extraordinary Popular Delusions & The Madness Of Crowds - RIA
Headings: Extraordinary Popular Delusions & The Madness Of Crowds
Extraordinary Popular Delusions & The Madness Of Crowds
Bullish Psychology
Confirmation Bias
More Evidence Of A Bubble
A Failure To Think Logically
Doing The Wrong Thing
This Time Isn’t Different.

Content: While that bias has always been problematic for investors, in recent years, as individuals lock themselves inside their “social media echo chambers,” it has worsened. There are currently many signs of exuberance in the market from retail traders. Most notably has been the surge in speculative “call option” buying. As shown by SentimenTrader.com, despite the recent correction, retail traders got even more aggressive. This type of behavior is the “can’t lose” mentality of investors in the market, to MacKay’s point. Such is not surprising, given that every market decline over the last decade got repeatedly met with Federal Reserve interventions. Such fostered the belief the Fed effectively established an “insurance policy” for investors to protect them from loss. The “perception” of “insurance” emboldened investors, both retail and professional, to take on increasing levels of “risk,” as there has been no penalty for doing so. Yet. But, as Mackay penned, such is what you would expect.