Share Market: Calculations And Emotions
The most common perception about Share Market is that it is a game of algorithm, and that it is entirely based on calculations. However, it might not actually be completely true. Infact, the rise and fall of share market is predominantly determined by people's emotions and mentalities.
Though I'm not well versed with technicalities of the stock market, but a little discussion every now and then with my spouse has assured me of the volatility and unpredictability of the market, owing to the unsteady and insecure mindset of common people when it comes to the matters of money.
Usually what happens with retail or small investors is that, a news, positive or negative, spreads about a particular share or brand, which results in collective panic or euphoria depending upon whether it is good or bad. It then leads to bulk trading for that particular share. That is why it isn't wrong to say that share trading is as much a game of emotions as it is a game of calculations. The market rises and falls in proportion to people's hopes and disappointments.
There is another interesting fact that I recently came to know, the day of Deepawali is not a day for trading as share market remains closed on that day. However trading is done for an hour, and is called 'Muhurat Trading', as a shagun on the festival of godess Lakshmi. Now isn't that a perfect example of how share market treads on emotions.
Thus it wouldn't be an overstatement to say that share trading thrives on common people's moods and sentiments to a great extent and responses and reactions of the public decide the numbers and the trends of the market.
What are your views on the relationship between emotions and share trading. Do share in the comments.
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