It's fascinating how the behavior of the market reflects the makeup of its participants—not just our enterprising nature but also our behavioral foibles, such as a herd mentality.
Take the recent market environment. On July 31, a run of trades seemed to beget a larger run of trades, culminating in a 2% drop in the S&P 500 index—enough to wipe out all of July's gains. Traders told the Wall Street Journal they saw "no single catalyst for the stumble."
That's another way of saying, "Who knows what caused the panic?" The global news hadn't really changed all that much. All of the social, political and economic promises and threats that existed on July 30 remained about the same on July 31. No one reported an asteroid crash. So why did the market, in its collective wisdom, stage such a significant decline?