All economic movements, by their very nature, are motivated by crowd psychology.”!
Our decisions… can only be taken as the result of animal spirits—a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.”
John Maynard Keynes
All through time, people have basically acted and reacted the same way in the market as a result of: greed, fear, ignorance, and hope. That is why the numerical formations and patterns recur on a constant basis.
Most of the time common stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble... to give way to hope, fear and greed.
And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy when others are fearful.
If I could know only one thing about an investment I’m contemplating, it might be how much optimism is embodied in the priceInvesting lies at the intersection of economics and psychology, the place where net present value meets greed and fear. It is important to know the numbers—but that is not sufficient.
in order to be successful, an investor has to understand not just finance, accounting and economics, but also psychology.