STUPIDITY OF THE MASS

We are human being with hundreds of weaknesses. We are fully irrational, but we love to believe in the opposite, but most of the decisions in our life we make emotionally. That is the harsh reality. We are not rational at all. Think about when you choose a party at the election or a soccer team. Doesn’t matter how they perform we love them and get stuck at them in irrational ways.

In our investment decisions probably we are worse. If we deal with money our greediness and fearful feelings dominate our decisions big time. Look at this cartoon below, it is familiar isn’t it? How many times we sold the bottom and bought the top. But the rule is well known by everyone Buy low, sell high – but we do always the opposite. Why? It is the cause of our emotions, which drive us.

We are fully emotional individually, but if we are in the mass we are acting like a total idiot. This is the best cartoon ever made about the stupidity of the crowd. This is my favourite carton at all.

The first time was printed in 1989 in Baltimore Sun by Kevin Kallaugher. In one report he said „It was so funny because it was so true.”

This picture describes better the psychological factor of trading than thousand words. Most of the guys only follow the mass, the gossips and tips. Shows precisely how one sentiment runs through the market. We tend to overreact the good and bad news in the market too.

This cartoon made 25 years ago, which confirms again the great rules of the market never change as Jesse Livermore said once "There is nothing new in Wall Street. There can't be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again."

So buy the low and sell the high that’s it. Sounds easy, but hard to do that.

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The BFM Assets Team.