Part 7/16:
The Psychology of Market Behavior and Animal Spirits
In this environment, investor psychology—or "animal spirits"—becomes a dominant force. Asset bubbles are fueled by speculative trading, driven less by fundamentals and more by momentum, protest, and herd behavior.
Recent phenomena such as the resurgence of GameStop, AMC, and Bitcoin illustrate this dynamic. These assets rally sharply not because of intrinsic value but often as a form of market protest against complacent monetary policy and the perceived disconnect between policy actions and economic realities.
This behavior acts as a release valve—a means for investors to express frustration and move wealth into assets that perform well during high-volatility periods, further destabilizing traditional markets.