Friday, July 22, 2011

The Psychology of Standing Apart From the Crowd

Socionomics provides us with a model to not just analyze herd behavior and how those waves of mood affect markets and society, but also provides us with warning signs that allow us to part ways with the crowd when necessary to reap great rewards or avoid negative consequences.

Standing apart from the crowd can be extremely difficult. Embedded below is an episode of Bloomberg's Risk Takers that profiles Michael Burry, the founder of Scion Capital, LLC, who anticipated the housing crash. There are some fantastic examples of how emotion - be it mass mood or the individual anger of investors towards Mr. Burry, even when he was proven right - trumps logic and reason most every time.

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