Mike,
Have you ever read Reminiscences of a Stock Operator, written in 1923 by Jesse Livermore (under an assumed name) a famous trader of the early 20th C? It may be an old book but psychology, the beast that controls the market, never changes. The main difference I found was the extraordinary use of margin - you may think it's leveraged today but back then you could walk into a brokers and buy $10,000 worth of stock with $500! I'm surprised the crash didn't come sooner.
Anyway, I picked out a quote you might like:
"The top is never in sight when vision is vitiated by hope.The average man sees a stock that nobody wanted at $12 suddenly advance to 30 - which surely is the top - until it rises to 50. That is absolutely the end of the rise. Then it goes to 60, to 70, to 75. It then becomes a certainty that this stock cannot go any higher. But it goes to 80 and to 85. Whereupon the average man, who never thinks of values but of prices, and is not governed in his actions by conditions but by fears, takes the easiest way - he stops thinking that there must be a limit to the advances. That is why those outsiders who are wise enough not to buy at the top make up for it by not taking profits. The big money in booms is always made first by the public - on paper. And it remains on paper." |
