BULLS & BEARS: Studying psychology can help investors earn money

In 1843, Charles MacKay wrote an investment book that even today remains a good-seller. It's titled, "Extraordinary Popular Delusions and the Madness of Crowds." In it, he argues the crowd is always wrong and that its irrational and manic mentality pushes prices to extremes. Throughout history, we all have witnessed many examples of this irrationality. The Holland tulip-bulb mania of the 1600s, various stock market crashes, and the willingness of kids to drain their piggy banks and frantically buy Pokemon...

 

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