Twitter hoax reveals downsides of the market

Yesterday’s Twitter hoax about an attack on the White House which led to a temporary plunge on US stock markets demonstrated one of the downsides of capitalism as presently practiced. That being, the herd mentality, which means as often as market trends are based on solid economic data or political happenings, plunges and peaks in global markets are derived from base human emotions, such as greed and fear. Whilst not in itself a significant problem, given that it was quickly rectified, yesterday’s happenings ought to provide food for thought about how and why markets (and by extension, the humans involved in them) behave as they do.

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One thought on “Twitter hoax reveals downsides of the market

  1. redearthbluesky

    The theories of Gustave Le Bon have long been used to explain the herd mentality of crowds and stock market. According to Le Bon, emotion trumps logic and individuality is lost.

    Over the years, Le Bon’s theories have been criticized by those who believe groups are very positive things, or more specifically, people who want to lead groups that have subordinated the individuals within them.

    Reply

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