Market peaks do not announce themselves. They do not arrive with a bell or a headline that reads “this is the top.” Instead, they form quietly, often during periods of maximum optimism, when the consensus is that the good times will continue indefinitely and the risks that would end the cycle are dismissed as relics of a less enlightened past. The psychology of market peaks is one of the most studied and least heeded phenomena in finance, because the same behavioral patterns repeat across every cycle even though the specific participants and assets change. Understanding the psychology of market tops…
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