"So far I have depicted bullish and bearish investment crowds pretty much as opposite sides of the same coin. It is tempting to believe that there is a pleasing symmetry that controls the way both sorts of crowds form, grow, and dissolve. But as anyone with experience in the financial markets will testify, this isn’t true. In fact, the growth of a bullish crowd generally proceeds at a more leisurely pace than does the growth of a bearish crowd. Bullish crowds last longer, and the mistakes they force upon markets tend to extend over longer periods of time. In contrast, bearish crowds form and dissolve over relatively short time spans, and the market mistakes they cause are for the most part of comparatively short duration. The reasons for this asymmetry are not very well understood. It may arise from the fact that there is no specific limit to how high a price may climb, but no price can drop below zero. In any case, we will find that this difference between bullish and bearish crowds is itself evidence pointing to the essential characteristic of all investment crowds: Their members eventually behave as a herd—a mass of individuals whose behavior is governed by instinct, suggestibility, and imitation, not by reason."
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