6 Simple Mass Psychology Rules to Ensure Success in the Markets

Many hands putting coin into a piggy bank. Saving and investing money concept
Many hands putting coin into a piggy bank. Saving and investing money concept

Emotion is primarily about nothing and much of it remains about nothing to the end.
George Santayana

• There will always be room for another massive disaster.

• 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.

• The best and most effective trigger for stress is fear of the unknown. Most people selectively choose their stress (poison); if you can selectively choose your poison, you can also decide not to ingest any more of it. Hence, the disease and the cure lie within your hands. Do something about it or someone else will, and the outcome will not be the one you wish, want, or hoped for?

• 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.

• 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.

• 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.

To win in the markets, you need to combine mass psychology with your conventional investment methodology. History is replete with examples that illustrate that the crowd is always wrong. The big players have always manipulated the masses; from the Tulip bubble to the financial crisis of 2008, nothing has changed, the ploy used is always the same. Create an atmosphere of fear and trigger a stampede; the masses dump all their stock, and the top players swoop in and pick up quality stocks for pennies on the dollar. The masses are always on the wrong side because they let their emotions get in the way. If you want to win in the markets, you need to learn how not to give into these emotions. It is okay to acknowledge them but don't allow them to take over. Once emotions take over, logic goes out the window, and nonsense takes over.