As a long-time market participant, I deal in reality and the greatest skill you can have is separating yourself from what Robert Prechter calls the “herding impulse.” In his landmark book on crowd psychology we learn it can actually cause stress, psychological pain and even psychosomatic illness to go against the crowd.
According to Prechter, “That is why, in financial markets, when the best time to buy or sell is at hand, even the person who thinks he should take action experiences a strong psychological pressure to refrain from doing so. He thinks, if only half consciously, ‘When my neighbor or advisor or friend thinks it’s a good idea, then I’ll do it, too. If I do it now, and I’m wrong, they will all call me a dope, and I’ll be the only dope.'” The discomfort of being alone in one’s convictions is so great that it involves physical reactions. One researcher says breaking the herding impulse by itself may induce pronounced autonomic activity such as sweating, twitching, flushing, muscle tightening and hair standing on end. A person’s reaction just “thinking” about taking an action apart from the herd can produce tenseness and even nausea.
Michael Campbell interviews Don Vialoux: Is It The Season For Investing In Gold? or Oil? or Stocks?