The Difficulty of Going Against the Crowd

Going against the crowd can be extremely challenging due to the natural human inclination to follow the majority. Asset prices, which are meant to provide information, often influence our decisions, leading us to buy when prices go up and sell when they go down. Market efficiency, driven by the wisdom of crowds, suggests that the crowd is usually right. However, when diversity is compromised and individual thinking is replaced by correlated views, the madness of crowds can occur. Evolutionarily, humans have a preference for staying within the group for safety, making it difficult to stand outside the crowd. Overcoming the fear of going against the majority can be a significant barrier.