Recently, while digging deeper into market structure and the true nature of each phase in a cycle, I came across another highly respected figure in investing: Howard Marks.
And that quote is absolutely true.
Markets do not operate purely on what is objectively correct, but on what is believed to be correct. When most people look in the same direction and buy into the same story, prices usually already reflect nearly all expectations.
Conversely, when belief weakens and narratives become vague, unclear, or simply unattractive, the crowd loses interest. That’s when perception begins to diverge from reality when gems get buried in the mud.