Kostolany on Stock Market Psychology (André Kostolany)

Trader's Library #23 · Trading psychology. An old speculator's wisdom on the crowd, money and patience.

Author: André Kostolany · Original: Kostolanys Börsenpsychologie · Year: 1991 · Usefulness for traders: ★★★★☆

What it's about

A collection of observations from the legendary Hungarian speculator who was active on the exchanges of Europe and the US for over 70 years. He describes crowd psychology, the market's dependence on money and sentiment, and the famous “Kostolany egg”, a model of the phases of bull and bear markets.

What it gives a trader

Kostolany divides market participants into the “strong hands” (with their own capital, patience and an idea) and the “shaky hands” that buy in euphoria and sell in panic. He teaches that short-term moves depend on psychology and liquidity, not fundamentals.

Lessons for traders

• in the short term the market is psychology; in the long term it's money and the economy
• shaky hands buy at the tops and sell at the bottoms (herding, Atlas of biases #31)
• sentiment changes faster than facts

What to watch out for

Kostolany was above all a contrarian investor, and his observations are anecdotal, not scientific.

Discussion

The discussion takes place in Hetman Capital Club (in Polish). Join the discussion in the Club →

Navigation

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Educational content, not investment advice. The book description is my own summary and assessment, not quotations. Edition details were checked in catalogues and bookshops, and where there was doubt I said so plainly.