stock maket psychology

I've been thinking a lot about the psychology and movement of the stock market. As soon as I find a decent book on the subject, I'll read it. That way I'm not just talking out my ass. Until then....

The market is the heart of capitalism. It is the core and in a very real way, feeds the economy its nutrients. Also, much like a heart it responds to different stimuli. Sometimes racing fast ahead and other times slowing down.

It is interesting to me although it is the heart of capitalism there are such fundamental differences. As a business owner it is in my best interest to do everything I can legally and morally do to eliminate competition. Less competition, more piece of the pie for me. This is not the case in the stock market. Why would I care if someone else makes money? There is only one goal in the market...and that is to make money. Which brings me to my second point.

I find it interesting how such a large group can behave like a single person. The market is composed of millions of investors with the same goal. MAKE MONEY. This is relatively easy when the body feeds the heart positive stimuli. When the economy feeds the market good news, it races ahead and nearly everyone makes money. The difficulty begins in a down economy. How do people make money?

It seems as if these millions of investors have got together in a big room and have come up with an idea on how win. They can't ignore the current economic data and push the market. That's not allowed. Instead the have decided to push the market down, down, down. They sell with such exuberance that the market is artificially low. Now that the market is too low and must come back up, so they buy and in one day there is a +1000pt day. Then they sell their profits and the cycle repeats.

This is how I see the market behaving. Like a single person who is stretching the market like a rubber band. Timing their buys and sells to make a buck in such horrible economic times. So watch the market closely and ride the waves.