Herding

Following the crowd into trades that are already crowded. Drives bubbles (everyone buys at the top) and panics (everyone sells at the bottom). Behavioral basis: social proof, career risk for managers, and the "comfort" of being wrong with the crowd vs. right alone.

The contrarian play (fading extreme sentiment) has been one of the most consistent edges in markets, but requires the temperament to hold positions while everyone says you're wrong.