4 Responses to “The Psychology Of The Stock Market”

• By Leisa D. Deffenbaugh on Mar 14, 2010

  I have the paperback version of this book. Though originally published in 1912, it reads as a contemporary volume. Why? Human DNA has not changed. Accordingly fear, greed, hope and despair will always be key elements in everything that we do–to include our being market participants.

  There are so many quotable phrases in this book. Foundational to everything is this one from p. 28 of the paper back: “Probably no better general rule can be laid down than the brief one, ‘Stick to common sense.’ Maintain a balanced, receptive mind and avoid abstruse deductions.”

  While that phrase is foundational to the book, this book ought to be foundational to every investor/trader’s resource library. And I promise this….when you get to the chapter entitled “They”–you will find it so extraordinarily reminiscent of our current conversations of the shadowy figures ‘propping’ up the futures or “quant machines go wild” that you will chuckle.

  You will not be disappointed by this book.
  Rating: 5 / 5
• By Scott Banister on Mar 14, 2010

  This little book of 100 pages is the most densely packed set of wisdom on markets I have ever read.

  Absolute finest book on market psychology I have ever read.
  Rating: 5 / 5
• By Sam Johnson on Mar 14, 2010

  This was a treat. Written in the begining of the 19th century it is still dead on. Even after reading a score of trading books this one reads fresh. It’s the kind of book that is short but brilliant and which you will find yourself rereading. Wonderful little apercues on market pyschology. Much of it, you already know if you’re an old hand, but expressed in a way that brings it home to you. Very well written. A joy to read.
  Rating: 5 / 5
• By Steve Burns on Mar 14, 2010

  This book was written in 1912, but surprisingly would have been a great guide book over the past 100 years. The principles could have made us a lot of money in the twentieth century and stopped a lot of the losses in 1929 and 2000.

  Here is the top five principles of the book in summary:
  
  1. Your main purpose must be to keep the mind clear and well balanced.Hence, do not act hastily on apparently sensational information;do not trade so heavily as to become anxious; and do not permit yourself to be influenced by your position in the market.
  
  2. Act on your own own judgement, or else act absolutely and entirely on the judgement of another,regardless of your own opinion.”To many cooks spoil the broth.”
  
  3. When in doubt,keep out of the market. Delays cost less than losses.
  
  4. Endeavor to catch the trend of sentiment.Even if you should be temporarily against fundamental conditions,it is nevertheless unprofitable to oppose it.
  
  5. The greatest fault of ninety-nine percent out of one hundred active traders is being bullish at high prices and bearish at low prices. Therefore, refuse to follow the market beyond what you consider a reasonable climax, no matterhow large the possible profits that you may appear to be losing by inaction.
  Rating: 4 / 5

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