Herd Mentality Overcome this dangerous habbit & Win Investing Game.
Herd mentality-Overcome it & Win The Investment Game

Herd mentality-Overcome it & Win The Investment Game

The time for change is today for tomorrow never ever comes; change now or remain woven in yesterday’s cocoon forever. Sol Palha

Herd Mentality

Herd Mentality is very dangerous when it comes to the stock markets

Rather than focussing on a Master’s in Psychology to help you understand yourself and perhaps those around you. One would be better off with  MA psychology (Mama’s Psychology); The Ma’s of yesteryear had a firm understanding in this field.  If you are 40 or older think back to some of the sage advice your Parents or your grandparents imparted to you. Indirectly the advice they offered you was very closely related to the field of Mass Psychology.

Mass Psychology explains the herd mentality issue very well

Mass Psychology is a fascinating field because if you can master a few simple principles you will increase your odds of success significantly in the financial markets. Markets are based on emotions; the main driving forces in the markets are fear and greed.

One must be willing to strip oneself to the bare bones and in doing so examine all one’s weakness and strengths with equal intensity. One cannot sugar coat one’s weakness and then apply thick layers of honey to one’s strength. If anything one should be more willing to downplay one’s strength and emphasise one’s weakness for it’s the areas that we are weak in that hold us back and not the areas that we are strong in.

 Simple Rules To Deal With The  Herd Mentality Syndrome

Schools, for the most part, teach us stuff we don’t really need 

School and society teach us a total bunch of nonsense when they state that one should hide one’s weakness and manifest one’s strength; it’s, for this reason, the world, in general, has not learnt anything and it’s for this reason that we are still barbarians. The only thing that has changed is the clothes; we wear to disguise our primitive behaviour other than that the caveman mentality still dominates.

 A good book is worth its weight in Gold 

I have read a lot of good books over the years but as far as I can remember at least going back 12-15 years, or more I have never been so fascinated by a book. Every single page was an experience to savour,  and the experience was pleasurable, to say the least.

There were books that I would find engaging in titbits and in some cases several pages would catch my eye and in doing so compelled me to go through them slowly for fear of missing something valuable but never the entire book. The last time I read a book to its entirety savouring each and every page was probably in my 20’s. I stopped doing this is because I could no longer find any book that was compelling enough to read each and every single page until I stumbled on this book that was quite old. I was in the right place at the right time.

 Take Random trips from time to time

I was in a small town in Connecticut (I usually take random trips to observe individuals as it helps in assessing what the markets are doing and where they might go) and stumbled upon this small used book store.  I almost feel guilty for having paid the paltry sum of 1.50 for such a genuinely insightful book that I went back to this shop and bought several other books.

This rather compelling book was written in the 1500s, yet the man who wrote this book, in my opinion, is brilliant, to say the least; he was born several hundred years before his time, and almost all his insights are applicable today.   Many of you will want the name of this book immediately. However, we feel that its best that you read all three parts of this essay before jumping into the book. Understand the principles of Mass Psychology and the book will have a greater impact on you.

One of the Top 10 best books of all  Time on the Herd Mentality Syndrome

I would personally rate this as one of the top 10 greatest books I have yet read. It also covers the concept of mass psychology very well.  This gentleman probably deserves the title of being the father or better yet the Grandfather of mass psychology.  As they say, if one cannot understand oneself then how can one ever hope to understand another? Off to an excerpt from this rather illuminating book.

A young man ought to break the rules to rouse his vigour and keep it from rusting. There is no course of life so stupid and weak as that governed by unalterable rule and discipline. If he takes my advice, he will occasionally kick over the traces. Otherwise, the slightest debauch will put him flat on his back and make him a social nuisance. The nastiest quality in a decent man is fastidiousness and a stubborn devotion to the eccentric behaviour, and all behaviour is eccentric if it’s not pliable and supple. 

Our young man should be able to do everything but love to do nothing but the good.

Let him laugh, play and wench with the prince. I would wish that even in debauchery he outdid his companions, so when he refused to indulge in a vice, it was not because he lacked the knowledge or power but simply the will. A man should not be ashamed not to dare or to be able to do what he sees his companions doing. Such a one should stick by the kitchen fire.

 When Socrates was asked: what is your country? He did not answer “Athens”, but “the World”. His fuller and wider imagination embraced the universe for his city. He extended his knowledge to society and his friendship to all mankind unlike ourselves who look no farther than the end of our nose. The vast world which some men now think is but one among many of its kind is the mirror in which we must look in order to know ourselves in our true scale.  And this world, in short, is the book my young scholar must study.  

Pythagoras used to say life resembles the Olympic Games: a few men strain their muscles to carry off a prize; others bring trinkets to sell to the crowd for a profit, and some there are (and not the worst) who seek no further advantage then to look at the show and see how everything is done. They are spectators of other men’s lives in order to better judge and manage their own.

Herd Mentality Dangers

The man who applies them will profit more than the man who merely knows them. When you see such a man, you will hear him; when you hear him, you see him. God forbid says someone in Plato, “that philosophy should mean learning a pack of facts and discouraging on the arts”. Hegesias once begged Diogenes to read a certain book.  “You are jesting”, Diogenes replied, “surely you prefer real to painted figs, why then don’t you choose living lessons rather than written ones?” 

It may happen that our pupil will prove to be a contrary fellow.

He may prefer to hear a silly fable rather than a wise discourse or the true story of a notable voyage. While his playmate’s fire to the beat of a martial drum, he may respond to the tub-thumpings of a circus clown. Perhaps he will find it less delightful to return dusty and victorious from a battlefield then stroll home after winning a match of tennis.  In that case, I see only one remedy. Even though he be the son of a duke, either his teacher should strangle him at an early hour, or if that can’t be done without witness, he should be apprenticed in some nice town to a pastry cook.

You don’t need a Masters in psychology just some common sense 

The masses are always on the wrong side of the markets. From the tulip bubble to the financial crisis of 2008, the masses have always been handed their heads on a platter. In most cases, this platter is not made from silver but some worthless metal and is almost always rusty.   If you take the time to learn from history you won’t be doomed to repeat the mistakes again. History clearly indicates that when the masses panic you should do the opposite and when they are euphoric you should flee for the hills. Never follow the herd for the outcome is never pleasant.

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Lessons in Mass Psychology  

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