The Zeitgeist Investor

By Tim Richards

Are markets rational as most economists claim? Or they influenced as much by moods and manias as they are by supply and demand?

Tim Richards is one of the leading bloggers on the emerging field of psychological finance.

In this ground-breaking book, he maps out how investors can understand the way the mood of the market changes at key pivotal points – and show investors how they can get ahead of the game.

To be truly understand the markets, he argues, an investor needs a knowledge of how to value a company, an insight into their own psychology and a rasp of the past history of previous market turns.  In the short-term it’s impossible to make any predictions about stock markets or economies, because the range of variables that can affect them is too great.  It’s easier to predict the weather, and we’re not yet very good at that.

Yet even as the short-term behaviour of markets is unpredictable so their long-term trajectory is entirely understandable.  We will go through periods of positive sentiment which will attract more and more people to markets, often investing on nothing more than expectation and overconfidence, until some unexpected event crushes peoples’ hope of a infinitely good future.  Then, as sentiment turns, markets will fall while many people will sit and wait for sentiment to pick up again, only to panic when they realise that the zeitgeist has changed forever.  This manic-depressive behaviour of investors is entirely predictable: this book is about why this is so, and why investors need to learn enough history to prepare themselves for the next shift in the zeitgeist.

Tim Richards is the creator of the Psy-Fi Blog, which has rapidly established itself as the world leading commentator of behavioural finance.

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