Blame machines for the stock market’s wild swings, but the response is all on you

Conventional wisdom goes that tops are a process. This makes sense when you think about market psychology. In a rising market, every pullback is bought, which conditions us to expect future dips to behave like previous ones.

But eventually, bounces are met with less enthusiasm and the rallying cry of “buy the dip” morphs into “sell the rip”. This typically plays out over weeks and months because in a bull market, investor psychology doesn’t stop on a dime, but rather it turns around like a cruise ship. The 1969 top provides a good visual of what this looks like.

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