The stock market is a gamble, and we have always been gamblers. Our million year old predecessors on the African savanna had to gamble. Would those roots and berries be in the same place today? Would another predator have eaten them, and if so, would it still be around? Would the water hole still be there, and would there be lions about, if so? Gambling has entered our DNA. And it is even more exciting today, as otherwise, we have so little to gamble about. We are pretty sure the coffee will be on in the morning,the car will start, and not much else will go wrong.
Gambling depends on one's particular slant. We often try to hedge on gambles, and make them safer and more assured. One can imagine a Marxist simian at the ancient water hole, violently head-locking others, and throwing their roots and berries to the less capable. Or an unevolved FDR, making rudimentary, but effective grunting noises, that allowed for at least some roots and berries to be more effectively used. Libertarian apes of course, would accept that whoever grabbed the food would be entitled to it, too bad for the others. Our prehistoric version of John Adams would be sitting by the water, and scratching his head, as he had thought all the roots and berries would be magically distributed to exactly who needed them.
We gamble on the markets, partly because we must. There is no sure thing in life. The market's are an invitation to spread risk, and as so not such a bad thing. Placing one's wealth on the line means anxiety though, and anxiety can morph into fear. When markets drop,there is a tendency for many to bail, as if not, there will be no more roots and berries, ever, ever, ever again, so the imagination runs. When markets are going up, what the heck, throw some of those berries in the pond, we don't need 'em. Let the fish eat 'em. Complacency sets in. Or worse yet, unwarranted projection takes place. If that was a particularly tasty berry, we are never ever going to eat a different one.
Today I think, as mentioned above, that there is a certain disconnect of the stock and bond markets, and the larger society. The financial sector of society has grown out of all healthy proportion, and capital has become ever more migrated to the ultra wealthy. The tendency to make wilder bets, when there are too many berries about, is much more pronounced. I think we can see the effects of this today. High speed computers are added to the mix, so that traders, hyperactive as they are, are superseded by machines making decisions in nano-seconds, and using algorithms, not quite the same as human logic. It's more a rich man's game, and involves more peripheral mechanisms than before.
