STREET DOGS
From Psychology of the Stock Market by GC Selden, published in 1912
The effort to reduce the science of speculation and investment to an impossible definitiveness or an ideal simplicity is, I believe, responsible for many failures … the market student of a mathematical turn of mind is always seeking a rule or a set of rules — a “sure thing”, as traders put it. [But while] scientific methods may be applied to any line of business, from stocks to chickens, this is a very different thing from trying to reduce the fluctuations of the stock market to a basis of mathematical certainty … most of the practical suggestions which can be offered are necessarily of a somewhat negative character. We can point out the errors to be avoided much more successfully than we can lay out a course of positive action.
But the following summary may be useful for the active trader:
Your main purpose must be to keep your mind clear … Hence, do not act hastily on apparently sensational information; do not trade so heavily as to become anxious; and do not permit yourself to be influenced by your position in the market.
Act on your own judgment, or else act absolutely and entirely on the judgment of another, regardless of your own opinion.
When in doubt, keep out of the market. Endeavour to catch the trend of sentiment. Even if it should be temporarily against fundamental conditions, it is nevertheless unprofitable to oppose it.
The greatest fault of 99 out of 100 active traders is being bullish at high prices and bearish at low prices. Therefore refuse to follow the market beyond what you consider a reasonable climax, no matter how large the possible profits that you may appear to be losing by inaction.