Psychology of the Stock Market. English-only reading by default; switch among English, Chinese, and Spanish, or compare languages side by side.
This chapter examines II. Inverted Reasoning and Its Consequences, using the author’s early-twentieth-century investment framework to explain how investors were expected to judge security quality, income, risk, and market conditions. It opens from the chapter’s own discussion: It is hard for the average man to oppose what appears to be the general drift of public opinion. In the stock market this is perhaps harder than elsewhere; for we all realize that the prices of stocks must, in the long run, be controlled by public opinion.
Readers studying financial history, investment education, and the chapter’s specific subject—inverted reasoning, discounted, full of stocks—will get the most from this section. It is not suitable as a modern trading or investment checklist.
Read this chapter as historical investment education. The market rules, disclosure practices, securities, commissions, interest-rate conditions, and investor protections around inverted reasoning, discounted, full of stocks may differ sharply from modern markets.