Showing posts with label groupthink. Show all posts
Showing posts with label groupthink. Show all posts

Tuesday 20 October 2009

The barriers to success are psychological rather than physical.

What can an individual investor do?

Though it is believed that investment can be a  very profitable field, it is only profitable to those who are strong of will and are prepared to work at it.  There is no simple way to get rich quick in the stock market. 

The barriers to success are psychological rather than physical.   Psychological barriers are so much harder to cross for so few of us can bear the thought of not being part of a crowd. 

Here are the words of advice from Dreman in his book Psychology and the Stockmarket

"....  the best chance an investor has is to stand apart from popular thinking.  He must be willing to forego the thrill of being in unison with the market, in agreement with the expert opinion and with the exciting, seemingly surefire ideas currently in vogue....  This is no small sacrifice.  To own the 'right' stocks in a rising market is a heady experience.  There is a wonderful blend of monetary gain and ego satisfaction in being right in a popular manner. 

Man is a social animal.  To succeed, the investor has to be able to withstand the tremendous pressure leading to conformity... (he) will face a continuing flow of negative feedback from the market, from experts and from groups of people whom he respects.  The reader may feel a little like the patient whose doctor has advised him to give up sex for this health.  Some of us might just prefer to die happy."