Thoughts on the Psychology of Speculation by Henry Howard Hopper published in 1926 and then reprinted by Fraser Publishing Company.

The book is excellent on many different levels. I like most that it talks about encompassing principles of human nature. Not the trivial made up ones of behavioral economics but broad human tendencies that are crucial to how we make our decisions and go about living our life.

Included among these broad human tendencies is the tendency to go crazy when you see a massive flow in front of you like the many who commit suicide in Niagara falls after seeing the water flow and the many who lose their minds as the market goes up. Also paramount is the incredible ennui that a human feels when something that he formerly owned goes thru the roof in other hands. I also like the many market periods of boom and bust he covers including the fantastic bull market of 1915 in the middle of the war where stocks of many a sage speculator was short skyrocketed by 15 fold or more. "He did not live to see General Motors at 850 on October 25, 1916," as his broker was forced to sell him out well before hand and "he had crossed the bar into the great beyond".

Like my father's experience in the Bowerey where he had to cart the bodies away when they couldn't pay the rent after dying from gambling, "the widow was left almost penniless and he was buried at the expense of the lodge". I like also the colorful vivid language so characteristic of the roaring 20s that makes on wish one was there and feel for the every emotion that he elicits.

I like best the last words he repeats of a short seller who made a fortune in leather goods and then lost it in the market through shorting. "In the past year I've suffered every torment known to the demons of hell. My only grain of comfort is that it's all over now and I have nothing more to lose." From this tragic experience, the author concludes "there is but little comfort or profit to be gained on the short side of a protracted bull market".

I will give many more incisive but pathetic recollections of the failures of speculators in the favorite stocks of the 1920s: General Motors, Studabaker, Union Pacific, Anaconda, Calumete and Hecla, Bethlehem Steel, et al.

A Psychologist writes:

Let's say for argument sake that, a la Atlas, an inventor develops a motor that eliminates the need for gasoline. In a single stroke, energy costs are reduced by 90%, creating massive savings for consumers and industrial producers. There are some who would eagerly buy on the news, anticipating an economic renaissance. There are others who would angrily pronounce this a temporary respite from the world's parlous condition and short the first market bounce. Bullishness and bearishness so often are a function of character, reflecting how people wish to see the world. The disappointment of some bears that the recent earthquake was not more catastrophic is more than a bit eye-opening.





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