Herd Mentality Definition & Stock market for beginners
Herd Mentality Definition & Stock market for beginners

Herd Mentality Definition & Stock market for beginners

Herd Mentality Definition

Herd Mentality Definition For Beginners

In this stock market for beginners, the section provides the basic foundation for the novice player for some grounding. The idea is not to provide you with a list of what you should or should not do but to start off with the most essential factor. This one factor is what determines if one is going to win or lose over the long run; it is said that 90% of players lose over the long run when it comes to investing. So what is this special one factor?  One’s emotions and how one lets them run amok.

In this section, we will examine the intriguing and rarely referenced field of Mass Psychology. The goal here is to provide the novice investor with a firm foundation; once you have a solid foundation in place it is easy to scale upwards.  Several articles that cover the topic of Mass Psychology eloquently are provided together with several videos.

Herd Mentality; the Lemming Syndrome

At the Tactical Investor, we believe Mass Psychology (the study of the herd)holds the key to successfully navigating the markets. Mass psychology provides you with a tool that enables you to gauge the primary emotion that’s driving the crowd. Once you identify the emotion you can identify the trend and once you have determined the trend, the rest is quite easy.   When you combine mass psychology with Technical analysis you have a system that is second to none and can help you pinpoint key market turning points.  Technical analysis helps one determine when a market is trading in the overbought or oversold ranges.

In short, mass psychology is very clear when it comes to the mass mindset; the crowd is always on the wrong side when it comes to spotting an opportunity. The following articles will help those seeking to advance their knowledge on this topic

Everything You Wanted to Know about Mass Psychology

Random Musings 

Learning Centre 

Winning the Investment Game

Sayings that matter by Sol Palha 

Stock Market for beginners Random notes

Trader’s need to adopt the steady but sure anthem, for that is the only way to build wealth.  For those who opt for the fast method usually end up last.  In order to find a solution one has to identify the problem; once identified the solution is relatively simple.  Hence understanding the emotions that drive you are key to your success.  If one knows what emotion triggers what reaction one can take notes and in reading these notes one will see how reckless one acts when one’s emotions do the talking.

One does not need to control their emotion but become aware of them; once you are aware of them, you have the choice to let them run loose or tell them to take a hike. Those that try to control their emotions do so without understanding them. If you don’t understand the problem you can’t find a solution.

There is nothing wrong with failure as long as you learn from it. We view failure as the stepping stone to success.   It is easy to deal with success but it takes a strong man or woman to pick themselves up and try again after being knocked down by failure.

Other explanations on Crowd, Mob or Mass Psychology

Crowd psychology, also known as mob psychology, is a branch of social psychology. Social psychologists have developed several theories for explaining the ways in which the psychology of a crowd differs from and interacts with that of the individuals withhttps://en.wikipedia.org/wiki/Psychologyin it. Major theorists in crowd psychology include Gustave Le BonGabriel TardeSigmund Freud, and Steve Reicher. This field relates to the behaviours and thought processes of both the individual crowd members and the crowd as an entity.[1] Crowd behaviour is heavily influenced by the loss of responsibility of the individual and the impression of the universality of behaviour, both of which increase with a crowd

The psychological study of crowd phenomena

Was documented decades prior to 1900 as European culture was imbued with thoughts of the fin de siècle. This “modern” urban culture perceived that they were living in a new and different age. They witnessed marvellous new inventions and experienced life in new ways. The population, now living in densely packed, industrialized cities, such as Milan and Paris, witnessed the development of the light bulb, radio, photography, moving-picture shows, the telegraph, the bicycle, the telephone, and the railroad system. They experienced a faster pace of life and viewed human life as segmented, so they designated each of these phases of life with a new name. They created new concepts like “the Adolescent,” “Kindergarten,” “the Vacation,” “camping in Nature,” “the 5-minute segment,” and “Travel for the sake of pleasure” as a leisure class to describe these new ways of life.

Herd Mentality Definition; Understand the Concept of Crowds First

Likewise, the abstract concept of “the Crowd” grew as a new phenomenon simultaneously in Paris, France, and Milan, the largest city in the Kingdom of Italy. Legal reformers motivated by Darwin‘s evolutionary theory, particularly in the Kingdom of Italy, argued that the social and legal systems of Europe had been founded on antiquated notions of natural reason, or Christian morality, and ignored the irrevocable biology laws of human nature. Their goal was to bring social laws into harmony with biological laws. In pursuit of this goal, they developed the social science of criminal anthropology, which is tasked with the mission of changing the emphasis from one of the study of legal procedures to one of studying the criminal.

 Herd Mentality Definition & Criminal Anthropology

“Criminal anthropology,” writes Giuseppe Sergi, “studies the delinquent in his natural place, that is to say, in the field of biology and pathology”.[4][5] The Italian Cesare Lombroso, professor of forensic medicine and hygiene in Turin, greatly advanced their agenda in 1878, when he published L’uomo delinquente, a highly influential book which went through five editions. The book, published in English in 1900 under the title “Criminal Man,” solidified the links between social evolutionary theories and the fear of crowds with its concept of the “born” criminal as the savage in the midst of civilized society. The book influenced both European and American legal experts interested in assigning responsibility to individuals performing dubious behaviour while engaged within a crowd. Wikipedia

The Crowd is A Living Entity: Albeit Inferior To The Average Human

Organised crowds have always played an important part in the life of peoples, but this part has never been of such moment as at present. The substitution of the unconscious action of crowds for the conscious activity of individuals is one of the principal characteristics of the present age. I have endeavoured to examine the difficult problem presented by crowds ina purely scientific manner — that is, by making an effort to proceed with a method, and without being influenced by opinions, theories, and doctrines.  This, I believe, is the only mode of arriving at the discovery of some few particles of truth, especially when dealing, as is the case here, with a question that is the subject of impassioned controversy. A man of science bent on verifying a phenomenon is not called upon to concern himself with the interests his verifications may hurt. In a recent publication an eminent thinker, M. Goblet d’Alviela, made the remark that belonging to none of the contemporary schools, I am occasionally found in opposition of sundry of the conclusions of all of them. I hope this new work will merit a similar observation. To belong to a school is necessarily to espouse its prejudices and preconceived opinions.

Still, I should explain to the reader why he will find me draw conclusions from my investigations which it might be thought at first sight they do not bear; why, for instance, after noting the extreme mental inferiority of crowds, picked assemblies included, I yet affirm it would be dangerous to meddle with their organisation, notwithstanding this inferiority. The reason is, that the most attentive observation of the facts of history has Gustave Le Bon, The Crowd, 5invariably demonstrated to me that social organisms being every whit as complicated as those of all beings, it is in no wise in our power to force them to undergo on a sudden far-reaching transformation.

Nature has recourse at times to radical measures, but never after our fashion, which explains how itis that nothing is more fatal to a people than the mania for great reforms, however excellent these reforms may appear theoretically. They would only be useful were it possible to change instantaneously the genius of nations. This power, however, is only possessed by time. Men are ruled by ideas, sentiments,

and customs — matters which are of the essence of ourselves. Institutions and laws are the outward manifestation of our character, the expression of its needs. Being its outcome, institutions and laws cannot change this character. The study of social phenomena cannot be separated from that of the peoples among whom they have come into existence. From the philosophic point of view, these phenomena may have an absolute value; in practice, they have only relative value. Gustav Le Bon The Crowd

Buy when the masses panic and flee when they are joyous 

Sol Palha 

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