An Individual in a crowd is a grain of sand amid other grains of sand, which the wind stirs up at will.
Gustave Le Bon – The Crowd 1896
“Hind sight is twenty-twenty” a phrase that best describes someone who has group remorse. Group remorse is the way we feel when we realize what we have done. It is always the same, “what was I thinking”. The fact is we weren’t thinking and it is who we are and we will do it again.
We can never truly avoid being lured into to do the bidding of a group, but what we can do is identify some signs of group mentality.
The following are some signs of group mentality:
1. Invincibility – When we are part of a group, we feel our actions have no consequence. We no longer have foresight. Foresight is a uniquely human trait that separates us from herding animals. To be able to see consequence is what prevents us from following the herd over a cliff. But when we are members of a group we become apart of the herd and we will follow it to the end without sight of the consequence. Groups take away our humanity.
2. Contagion – Groups spread like a wild fire. They infect towns, cities, states and continents. Signs of contagion are primarily seen in the mass media. Contagion is the fad that has people camp out in front of a store for days to buy a new electronic device. Contagion is what makes people pay twice the retail price of a game system instead of patiently waiting. Contagion in history is remembered as the madness of the crowd.
3. Hypnotic Spell – A simple question with no answer “Why”. When we are under the hypnotic spell of a group, the question, “Why?” has no logical answer. This inability to understand why we are doing something is what leads us to group remorse. Wars and modern marvels are created under hypnotic spells.
The most important aspect of any group action lies in its natural limit. If soldiers are asked to march 50 miles and they are only humanly capable of going 45 miles, then they will collapse at the 45-mile mark and never reach the battle. Groups always attempt to push beyond their natural limits and this is where we see change.
Groups primarily move markets and to understand their natural limits would put us at an advantage in understanding when it cannot get any better (bear market) or any worse (bull market). These natural limits and ways to identify and track them are discussed at length in “The Art of Expectations”