James Surowiecki's book, The Wisdom of Crowds makes the strong case for the aggregate results of a  large sampling of diverse individuals, deciding independently, are likely to provide more reliable decisions and predictions than any one individual or expert.

"Any decision-making mechanism therefore has to be good under conditions of uncertainty.   And what’s more uncertain than the future?"  - From The Wisdom of Crowds by James Surowiecki

The key to success is not knowing the future but knowing what the vast majority of investors think (and feel) the future will be.   

"Nobody knows anything" - From Adventures in the Screen Trade by William Goldman, screenwriter, referring to Hollywood's inability to pick hit movies.  The weekend box office is a crapshoot, with hits and flops decided by the audience, not the Hollywood marketing gurus.  The same advice holds true for the future direction of the financial markets: "Nobody knows anything"

However, together we pool our instinctive knowledge about the future when we choose movies, satisfying the 4 conditions of wise crowds:

"The four conditions that characterize wise crowds: diversity of opinion (each person would have some private information, even if it’s just an eccentric interpretation of the known facts), independence (people’s opinions are not determined by the opinions of those around them), decentralization (people are able to specialize and draw on local knowledge), and aggregation (some mechanism exists for turning private judgments into a collective decision).   If a group satisfies those conditions, its judgment is likely to be accurate." - From The Wisdom of Crowds by James Surowiecki

Investing is all about confidence in the future, that events will unfold with some certainty, that there will be someone out there tomorrow willing to pay more for the stock you are buying today.

Neuroeconomics studies emotions and their role in decision-making.  We are not logical beings, but slaves to our emotional wiring from the beginnings of time. 
We think we are logical and rational, but reality is different: we feel and then act.

"Our investing brains often drive us to do things that make no logical sense – but make perfect emotional sense.  That does not make us irrational.  It makes us human...Emotional circuits deep in our brains make us instinctively crave whatever feels likely to be rewarding – and shun whatever seems liable to be risky." - From Your Money and Your Brain by Jason Zweig

• Investors act as a group, herding in a stampede of fear and greed based on their confidence in the predictability of future events.

• Investment decisions are based primarily on emotion, not logic as the new science of neuroeconomics has proven.

• Every week, millions of people invest their hard-earned money and time to feel happy, sad, excited, aroused, inspired, scared, thrilled and comforted. The same investment emotion carries over to the week's market buy and sell decisions.

Investor confidence moves up and down, with gut reactions and survival instincts reacting to events from deep in our primal brains.  Investors follow the herd whenever possible, trusting the safety and collective wisdom of the majority.

Adam Smith argued in his landmark text: The Wealth of Nations that an invisible hand leads the actions of an individual's self-interest towards a collective common good for all.  The key features of this invisible hand are that it is:

•  invisible (people are not aware of actions beyond their self-interest) and
• decentralized (without agreements or organizations coordinating to produce outcomes). 

It was John Maynard Keyes who tackled the future in terms of risk vs. uncertainty.  If future events can be predicted through statistical models, risks can be quantified and decisions made with confidence to beat the odds.  When true uncertainty exists, decisions are made from emotional criteria, gut feelings or, in Keyes words, "animal spirits" which enable action without logic, rational, justifiable thought.

Our Animal Spirit on the hunt

The financial markets depend on investor confidence in the predictability of the future.  Under conditions of  true uncertainty, investing is an emotional decision. 

 MarketBOB is the best way to measure the emotional psychology of crowds and investor confidence to act in times of uncertainty.