The Effect of Market Trends on Investor Behavior

The current trend of the S&P making consistent new highs contributes to a heightened sense of FOMO, or fear of missing out, among investors. Many individuals and institutional investors may find it difficult to adopt a defensive position due to concerns about falling behind if the market continues to rise. This psychological pressure fosters a reluctance to become cautious, potentially putting investors at risk if a market correction occurs. The podcast emphasizes that such behaviors are common during bullish market conditions, complicating decision-making for risk management.