I've searched on that principle of maximum ruin, but I didn't found a lot of information. Could you detail it more please?
Thanks!
It's basically an application of the
Pareto Principle.
The Pareto principle (also known as the 8020 rule, the law of the vital few, and the principle of factor sparsity) states that, for many events, roughly 80% of the effects come from 20% of the causes.
In other words, 20% of people will benefit from the big moves, and the other 80% will be the cannon fodder.
Do you apply the same logic to the stock market?
Many comments on MarketWatch, Yahoo Finance and others are all about how the market is now finally crashing.
Watch the comments. When everybody starts agreeing, we will be at the bottom.