It has often been noted by stock market writers that since the great public is bearish at the bottom and bullish at the top, it could make its fortune and beat the multi-millionaires at their own game by simply reversing itself—buying when it feels like selling and selling when it feels like buying. Tom Lawson, in the heyday of his publicity, seems to have had some sort of dream of the public selling back to Standard Oil capitalists the stocks which it had bought from them and thus bringing everything to smash in a heap—the philanthropic Thomas, doubtless, being first properly short of the market. This wrongheadedness of the public no longer exists to the same extent as formerly. A great number of small investors buy and sell intelligently and there has been a most noticeable falling off in the gambling class of trade—much to the satisfaction of everyone, except, perhaps, the brokers who formerly handled such business. It remains true, nevertheless, that the very moment when the market looks strongest, is likely to be near the top, and just when prices appear to have started on a straight drop to the zero point is usually near the bottom. The practical way for the investor to use this principle is to be ready to sell at the moment when bull sentiment seems to be most widely distributed, and to buy when the public in general seem most discouraged. It is especially important for him to bear this principle in mind in taking profits on previous commitments, as his own interests are then identified with the current trend of prices. In a word, the trader or investor who has studied the subject enough to be reading this book, probably could not make profits by reversing himself, even if such a thing were possible; but he can endeavor to hold himself in a detached, unprejudiced frame of mind, and to study the psychology of the crowd, especially as it manifests itself in the movement of prices. VI—The Panic and the Boom Both the panic and the boom are eminently psychological phenomena. This is not saying that fundamental conditions do not at times warrant sharp declines in prices and at other times equally sharp advances. But the panic, properly so-called, represents a decline greater than is warranted by conditions, usually because of an excited state of the public mind, accompanied by exhaustion of resources; while the term “boom” is used to mean an excessive and largely speculative advance. There are some special features connected with the panic and the boom which are worthy of separate consideration.