# Markets efficient but crowd madness possible: Morgan Stanley 2026-08-09T06:05:48+00:00 | Business & Economy | Indian Opinion Desk Corroboration: 1 independent outlet A Morgan Stanley research report, as reported by The Hindu Business Line, warns that while stock markets generally do a good job of aggregating information and making prices hard to beat consistently, extreme sentiment, sharp price moves and elevated valuations could signal a breakdown into 'crowd madness'. The report identifies three conditions for collective intelligence: cognitive diversity, effective aggregation and appropriate incentives. Stock markets are particularly vulnerable to a breakdown in diversity because investing is social, leading to correlated behaviour that can cause booms and busts. Longer investor horizons tend to converge towards fundamental value, while shorter horizons are more prone to bubbles. For investors, periods of unusually strong consensus deserve extra scrutiny rather than routine acceptance of market prices. ## Coverage - thehindubusinessline.com Tags: crowd behaviour, investor sentiment, market efficiency, Morgan Stanley, stock market, valuations Canonical: https://indianopinion.org/markets-efficient-but-crowd-madness-possible-morgan-stanley/ License: Summary and commentary (c) Indian Opinion, reusable with attribution. Facts belong to the linked sources. Cite: https://indianopinion.org/markets-efficient-but-crowd-madness-possible-morgan-stanley/#story-in-brief Review state: restored archive article, accurate at time of publication, not offered to search indexes.