When Blue Chips trade like Bitcoin – Emotional Intelligence and the stock marjet

On Friday 20 February 2026 an interesting article was published by Eric Johnston  When blue chips trade like bitcoin: Welcome to Australia’s wild ride. 

What caught my eye was this explanation by Howard Marks, the founder of Oaktree Capital Management,.  He has often addressed the theme of stock volatility over the decades he has been writing his memos, including through the rise of high-frequency trading.

The industrial heavy Dow Jones and S&P 500 are trading near record highs.

Following a major broad market sell-off in early 2024, he pointed out that in the real world, things fluctuate between “pretty good” and “not so hot”. But when it comes to investing, perception swings from “flawless” to “hopeless”.

“That says about 80 per cent of what you need to know on the subject,” Marks wrote in a recent memo to clients.

Marks says when prices collapse, it is not because conditions have suddenly become bad. Rather, they become “perceived” as bad. The same can equally be said about rallies.

There are three factors contributing to the process: a heightened awareness of things on one side of the emotional ledger; a tendency to overlook things on the other side; and finally, a tendency to interpret things in a way that fits the prevailing narrative.

In general, Marks believes, investors tend to err on the side of optimism, ignoring the negatives. When the pendulum swings, there is a dramatic effect.

“If security prices were really the result of the rational, dispassionate evaluation of data, presumably one piece of negative information would move the market down a little, and the next such piece would move it down a bit more, and so forth,” Marks says. “But instead, we see that an optimistic market is capable of ignoring individual pieces of bad news until a critical mass of bad news builds up, at which time a tipping point is reached, the optimists surrender, and a rout begins.”

What Marks is saying is that for many investors emotion rules.  Newbies to stock market investing check  the share price of  their shares every10 minutes.  Few follow the advice of Buffet which is to value their portfolios once a month.  The maxim holds true: Time in the market beats timing the market.

Emotional intelligence is not about going with flow; it is about knowing what are your dominant 7MTF drives are and learning to control them.  My advice to anyone interested in equity investing is the same: read Buffet’s annual letter to Berkshire Hathaway shareholders from the beginning.  He writes well and his self-control is stunning.