Friday, March 25, 2011

Groupthink - the new good thing?

There is going to be, in my opinion, a lot of energy devoted to monetizing this concept.

So the idea is that if everybody piles into the same trade at the same time it is more likely to work?  That is sure for sure.  It is also not the point at a lot of times, though it mimics technical analysis as it honors the idea that the "collective crew might know more than me".

There is a fine line in here between missing what others know and being the last to do what others have done. Or are doing en masse.

I want to follow up on this tomorrow.


Here's the follow up.  Of course any trade is more likely to work if lots of people put it on at the same time.  Any trade is almost guaranteed to work if 100 people put it on at the same time.  In the short term.  The trickier thing is what happens when the group thinkers want to go the other way.  Everybody can't close positions at the same time.  I would not IM you.

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