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Irrational behavior in normal markets

Irrational behavior and normal markets can puzzle investors

Irrational behavior in normal markets can puzzle investors

Irrational and Normal

Irrational behavior in normal markets can puzzle investors, especially investing novices. In fact, irrational behavior and normal markets are perfectly normal. They are the same thing!

This is Part 2 of the White Top View Series, Mind Game discussing emotions and psychological aspects of investing. Links to all six parts of the White Top View Series, Mind Game are at the end of this post.

Most people think of themselves as rational beings. However when it comes to investing you can see much irrational behavior. It seems many of us can get a little nutty. Irrational buying and selling occurs every day in many stocks on the markets around the world.

This is not something to stress over, just be aware of it. You can use it to your advantage. Making both skillful entries into investment positions and timely exits from those positions, can definitely add to your gains.

Think about how we use the TV remote. Especially we guys “watch” multiple programs or games at once.

Amusing ourselves or frustrating someone else, makes us think that they just want the remote! How rational is that?

Drivers Can Be Nutty

Think of driving. In a phenomenon that confuses mathematicians, we all claim above average driving skill! We know we are good drivers. However, you may not so sure about me and I do wonder about you…!?

We don’t have to drive far to see irrational behavior and poor decision-making. It is on every one of our highways and byways. Driver education and experience has us ready for it. By routinely dealing with such irrational behavior, we keep safe. That lets us comfortably and securely arrive when and where we want.

In similar fashion, some stock market behavior can seem irrational and bizarre. Possibly, however, overall the markets work very well. Understanding and accepting this is a positive step.

Irrational R US!

When being honest, most people can admit to irrational investing behavior. Perhaps shockingly, that includes financial industry insiders. Most admit to  investing on an impulse. The few that deny, lie. Professional or not, we all screw up and do irrational things.

Understanding and accepting this as fact, helps you become a superior investor.

Knowing emotions and psychology effect markets can produce profits

Knowing how emotions and psychology play out in markets boosts confidence and profitability. That leaves knowledgeable investors holding more money.

Be aware that this normal irrational and emotional behavior, definitely effects and influences the markets. Especially in the short-term. Everyday in the stock markets, we see more evidence.

Knowing Gives You An Advantage!

Step by step you can learn how to navigate the markets with skill. That lets you become comfortable and able to safely and profitably invest in stock markets. Then, you will be as comfortable in the markets, as you are when driving down the street outside your home.

Know and accept that emotional behavior throughout the market is not just displayed by retail clients. Professional panics are well-known. Such behavior is not considered proper to discuss in polite company!

This bit of heresy often gets a knee jerk rejection from some old hands. They are not all Egyptians, but they do live in the land of denial!

Most detailed stock charts display the daily evidence of emotional play. Know and accept that it is normal human behavior. It is us behaving like us. We can be nuts!

Knowing and using this gives us an advantage. Advice to leave your emotions out of the market is nonsense. It is hokum to think you are going to behave differently in the market than you do elsewhere in your life.   And neither do the other people!

Your emotions come with you. They involve every aspect of your life. They are coming to the market with you. Get used to it! Learn how to use them to your advantage. That can give you a significant edge over other players! Then you can invest confidently, profitably and end up holding more money.

Using this knowledge gives you an edge. In future discussions we cover specific knowledge and techniques that can make emotions and market psychology work for you.

Next time in Part 3 of the 6 part White Top View Series, Mind Game to discuss how to Part 3: Control 10 Paralyzing Mental Blocks of Investors.

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Have a prosperous day!


White Top Investor
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These discussions and information intend to help you better understand markets and investing. I am not a financial or investment advisor; opinions are for informational and educational purposes only and are not intended as investment advice. For syndication of the site or blog, please contact

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Links to the White Top View Series, Mind Game

Part 1: 3 Wealth Assassins Lurk

Part 2: Irrational Behavior in Normal Markets

Part 3: Control 10 Paralyzing Mental Blocks of Investors

Part 4: Attached, Stubborn and Helpless Investor

Part 5: Optimism and Unrealistic Minds of Investors

Part 6: Muddled Minds Harm Investors

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