Everyone likes the phrase “wisdom of crowds.” It sounds fair, democratic, and comforting. Put enough people together, collect their opinions, let the price settle, and somehow the market finds the truth. It is a lovely idea, and in some cases it is useful. Markets do aggregate information. Prices do tell us something. I have spent my career paying attention to them.
But the older I get, the less I believe the crowd itself is a genius. The crowd creates volume. It creates liquidity. It creates excitement, panic, relief, fear of missing out and noise. It creates the conditions in which prices move. But the edge usually sits somewhere else. It sits with the few who understand the setup better, act earlier, or have the discipline to trade against the emotional flow. I wrote a lot about crowd behavior in Price Catalysts, because so much of investing comes down to understanding why people act when they do.
