Fear of losses can drive even the most experienced traders and investors to liquidate risk positions and move to the sidelines. Markets witnessed price moves created by fear during the 2008 global financial crisis, the 2020 pandemic, and in early 2022 when Russia invaded Ukraine. These sudden events caused market panic, causing a herd of selling and pushing markets to illogical, irrational, and unreasonable lows.
Greed is another significant factor for the path of least resistance of market prices. Greed causes market participants to overstay their welcome in markets or join a bullish trend to avoid missing a move. Many professional traders and money managers have little choice but to be greedy. Measurements against market benchmarks like the S&P 500 and other macro barometers cause them to attempt to squeeze the last drop from a market trend.
