Principles of mass psychology

One of the best ways to get a grasp for the basic principles of mass psychology would be for us to list a few things we have observed over the years.  We hope this will help provide the student who wants to further  his knowledge and understand of mass psychology with a firmer footing. In short, mass psychology is knowing when to buy and when to sell, by utilising mass sentiment to your advantage. You do not just buy or sell because the masses are doing so. One has to wait for the emotion to hit the boiling point, in some cases, it needs to hit the extreme of extreme of ranges. In other words, people should be frothing with Greed or fear before you step or out of the markets.

 Factors to remember and keep in mind when it comes to Mass Psychology and Investing

  1. There will always be room for another massive disaster.
  2. Stress is the most destructive force in the universe (at least as far as living things are concerned). Therefore, if you are part of the living dead, then this probably does not apply to you.
  3. The best and most effective trigger for stress is fear of the unknown. 99% of humans know nothing that could be termed as relevant, and or the little that they know is more destructive than useful. Most humans selectively choose their stress (poison); if you can selectively choose your poison, you can also choose not to ingest any more of it. Hence, the disease and the cure lie within your own hands. Do something about it or someone else will and the outcome will not be the one you wish, want, or hoped for?
  4. There will always be fear mongers warning you that the end of the world is nigh (so far their record is dismal for the world has not ended). Your best option is to view their dire warnings in the same light as the ravings of a lunatic.
  5. There will always be people who say I wish I bought when the markets were falling apart, but when that situation finally presents itself, these very same individuals will be the first to head toward the exit.
  6. Ironically, people worry about dying, instead of focusing on how to make each moment of this finite life more memorable. Dead men tell no tales because the living are much better at it.

Subscribe Now

Other articles of interest:

Avoid These Common Stock Investment mistakes

A clear Illustration of the Mass Mindset In Action

Technical Analysis

Why Mechanical and Technical Analysis Systems Fail

The Limitations of Trend Lines

Contrarian Investment Guidelines

Inductive Versus Deductive reasoning

Mass Psychology Introduction

Mass Psychology Part I, Sept 26, 2007

Mass Psychology II, Oct 2, 2007

Mass Psychology III Oct, 9, 2007

Comic Strip Illustrating Mass Mindset (July 2015)