Post by pkcrafter » Thu Sep 30, 2010 11:27 am

empb, thanks for bringing up this excellent piece of work from Robert T. He obviously put a lot of work and time into this post.I looked at several links including this fascinating video on the 1929 crash. Much to learn about risk and behavior here and I highly recommend viewing it.Here is the link. While this video is a full hour, you might skim through, but I ended up watching almost all of it. The parallel between 1929 and 2000 is remarkable. This video shows what investor sentiment/speculation can do, but it also demonstrates that while investors run with and support speculation, somewhere down inside they know they are on the top of a house of cards. When the fall began it's as if everyone knew it was going to happen and they wanted out in a panic. In other words, the fear was present, but suppressed in favor of the risk of more gains. Also interesting to see how one man tried to turn the tide by publicly buying and almost succeeded. You can't always be a contrarian and make money. You can be right and lose money if the market disagrees with you.The behavioral experts would call what's going on irrational. We can call it normal human behavior. We have to understand the most common emotional pitfalls and learn to control them if we want to be good investors.Paul