Saturday, April 28, 2007

Psychology of the Stock Market

I have finished the slender volume of Psychology of the Stock Market, by G. C. Selden and I'm recommending it with great enthusiasm. If you click on the title, you will be directed to a link that will give you one of the chapters.

Here are the Chapters:

I The Speculative Cycle
II Inverted Reasoning and its Consequences
III "They"
IV Confusing the Present with the Future-Discounting
V Confusing the Personal with the General
VI The Panic and the Boom
VII The Impulsive vs. the Phlegmatic Operator
VII The Mental Attitude of the Individual

I was particularly struck by III-They. Why? Because I think that I've worked myself into a froth at times due to the constant references to the "They" in current times--to see this portrayed almost identically in this book--only with the admonishment to truly ask who are "They" rather than feeding the fear of it--was quite instructive.

The content that I think that I have the most to gain from (rather than constant fear of the proverbial "They") is from pp. 87-8:

". . . the trader must be a reasoning optimist.. . . In the market you are nothing but a chip on the tide of events. Optimism, then, must consist in believing not that the tide will continually flow your way, but that you will succeed in floating with the tide. Your optimism must be , in a sense, of the intellect, not of the will. An optimism based on determination would, in this case, amount to stubbornness.

Another quality that makes for success in nearly every line of business is enthusiasm. For this you have absolutely no use in the stock market. The moment you permit yourself to become enthusiastic, you are subordinating your reasoning powers to your believes or desires.

. . . You wish to keep your mind clear, cool and unruffled as the surface of a mountain lake on a calm day. Any emotion-enthusiasm, fear, anger, depression--will only cloud the intellect."
A slim but pithy volume.

Angela reminds of the wonderful site by CXO. They, too, were on my long list of bookmarks until my ^$#!#^&^ computer crash. I'll add them to the info mosaic.


russell120 said...

Your link does not match the book you mentioned. Though it does lead one to an interesting book.

Leisa said...

Russell--scroll down. The link is to an excerpt from the book that is in The Handbook of Risk.