The psychology of speculation

Chapter 2: THE PURPOSE OF THIS BOOK

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About This Book

The author examines psychological and social forces that drive stock market speculation, arguing that personal impulses, sentiment, and panic often override rational principles. He surveys the distracting power of continuous price quotations, the unsettling effects of sudden gains and losses, and the lure of gambling-like frenzies, bogus securities, pyramiding, and over-acquisitiveness. Drawing on anecdotes and practical observations, chapters offer warnings about common misjudgments, the limits of technical rules, and the ways market mood can defeat sound plans, concluding that disciplined self-knowledge and experience are essential safeguards against speculative ruin.

THE PURPOSE OF THIS BOOK

There are many persons who, although knowing a great deal about the stock market, do not realize that the reason why they cannot “beat” it, is that they know too little about themselves. There are others who know their limitations well enough to let this monster problem alone. As it is important that one should learn to swim before plunging into deep water, so it is well to know some of the dangers of the stock market before delving into it.

It is not the purpose of this book to dissuade anyone from buying and selling securities, but merely to point out some of the stumbling blocks and handicapping influences that speculators, and even investors, are sure to encounter.

H. H. H.