Why does investor behaviours never change?

By Crypto4light | crypto4light | 29 Feb 2024

The consistency of investor behaviors stems from the fundamental aspects of human psychology, which remain largely unchanged over time. Achieving proficiency in investing requires not just a surface-level understanding of psychology, but a deep and nuanced comprehension that can only be acquired through years of observation and study. And you need work with your own mindset.

Market dynamics are driven by the actions of its participants, who are essentially human beings. Whether in the short term or the long term, market movements are a reflection of human behavior. This doesn't diminish the importance of analytical skills in investing; rather, it underscores the crucial role that understanding human behavior plays. Even someone with exceptional analytical abilities may struggle to succeed in investing without a keen insight into human psychology.

Because human behavior tends to remain consistent over time, investor behavior also remains consistent. As a result, markets will continue to exhibit familiar patterns and tendencies as long as they are driven by human participation.

Throughout 2022 - 2023, a common narrative has permeated discussions:

  • We will see 2008 financial crisis.

  • Interest rates are poised to increase

  • The belief is that the Federal Reserve will no longer intervene to rescue the markets.

  • Btc its just a cat bounce, sp500 should go down to 2800

  • There is no new alt season

  • AI trend its a Dot com bubble And many other. people love to find some LOGIC or patterns, because its will be much easier play the games in "experts"

Yet, there's a fundamental flaw in this narrative: human behavior. We have a tendency to forget lessons learned and revert to our previous habits. As global crises begin to recede, history shows that we often resume our previous patterns. In other words, we revert to our old ways: buying, buying, and buying once again.

Human nature and the market are constants that remain unchanged over time. Understanding our typical behaviors, whether good or bad, is essential.

To excel as an investor, one must delve beyond just grasping the fundamentals or technicalities of investing; it's crucial to delve into human behavior. This entails studying not only market behavior but also human behavior in general.

By releasing expectations of instant wealth in the market, we can appreciate its intricacies. The market serves as a remarkable platform where one can glean insights into money, business, psychology, history, and, most significantly, oneself. It's a rigorous system that penalizes errors but also bestows rewards for wise decisions. At the end just reduce your expectations, and just simply trade assets not your wishes.


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