Sep

7

I have been reading

Psychology of the Stock Market

by G. C. Selden

Ticker Publishing, New York, 1912

Available online at Google Books

Here are some representative quotations:

Preface

[This book] is the result of years of study and experience as fellow at Columbia University, news writer, statistician, on the editorial staff of The Magazine of Wall Street, etc.

pp. 11-12

The psychological aspects of speculation may be considered from two points of view, equally important. One question is, What effect do varying mental attitudes of the public have upon the course of prices? How is the character of the market influenced by psychological conditions?

A second consideration is, How does the mental attitude of the individual trader affect his chances of success? To what extent, and how, can he overcome the obstacles placed in his pathway by his own hopes and fears, his timidities and his obstinacies?

pp. 27-28

...The point we fail to remember is that public opinion in a speculative market is measured in dollars, not population. One man controlling one million dollars has double the weight of five hundred men with one thousand dollars each. […]

This is why the great body of opinion appears to be bullish at the top and bearish at the bottom. The multitude of small traders must be, as a plain necessity, long when prices are at the top, and short or out of the market at the bottom. The very fact that they are long at the top shows that they have been supplied with stocks from some source.

Again, the man with one million dollars is a silent individual. The time when it was necessary for him to talk is past - his money now does the talking. But the one thousand men who have one thousand dollars each are conversational, fluent, verbose to the last degree; and among these smaller traders are the writers - the newspaper and news bureau men, the manufacturers of gossip for brokerage houses.

It will be observed that the above course of reasoning leads us to the conclusion that most of those who write and talk about the market are more likely to be wrong than right, at least as far as speculative fluctuations are concerned. This is not complimentary to the "moulders of public opinion," but most seasoned newspaper readers will agree that it is true.
[…]

It has often been remarked that the average man is an optimist regarding his own enterprises and a pessimist regarding those of others. Certainly this is true of the professional trader in stocks.

Jim Sogi comments:

Certainly the price action on Thursday and Friday's announcement that here is your pink slip and the end of Western Civilization is imminent put all that to the test.


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