Why the crowd has its own mind
Crowds were a fundamental part in all of human history. Sometimes for the better and sometimes for the worse. We have seen crowds demolishing castles with their pure hands and we have seen crowds committing the most terrible crimes in human history. Therefore, studying what is driving the crowd is among the most important fields in psychological sciences.
French polymath Gustave Le Bon is one of the earliest pioneers in the field of mass psychology. His book The Crowd: A Study of the Popular Mind, first published in 1895, served as a blueprint for sovereigns ever since. In the 21st century, it still as relevant as it was when first published. It is very astonishing to see that a crowd can consists of the smartest individuals, but still acts stupidly.
The Crowd is a book that is, of course, not only relevant in the field of investing but rather for everyone who is keen to learn more about the fundamental behavior of a crowd. Indeed, in finance, we see a lot of the same stupid behavior from crowds Gustave Le Bon already described already years before the first stock exchange was founded. Listen to the greatest and most humble investors like Warren Buffett and John Bogle who tell you more about the fact that markets acting very strange based upon emotions, in The Crowd you not only learn why financial markets tend to act strange, but also why people still believe in conspiracy theories and support extreme political views. It is all about the crowd and its own mind.
The book was originally published in French but is also available in German* and English*. When reading this you should bear in mind that it was written already 1895 and may use terminology and a style which is no longer accurate in our century, but the key messages are as valid as before.