MENTALITY OF INVESTORS

Wanganui Chronicle, Volume 79, Issue 14, 17 January 1936, Page 11

MENTALITY OF INVESTORS

MASS PSYCHOLOGY Some illuminating comments on the mental actions and reactions c-f investors aie made by the contributor of the “Banking and Finance Feature” in the current issue of the New Zealand Accountants’ Journal. Alter a reference to the return of confidence—a kind of reaction after the numbing effects of the slump—the wrjtcr remarks: “There liets in these facts a danger worthy of attention, particularly by accountants, bankers and financiers and others io whom members of the investing public may look for advice, and guidance. The danger is that the thawing of thv frozen assets represented by locked-up fixed deposits in the banks might resemble the breaking of a dam rather than the arbitrary and controlled turning of a stopcock. “It is an extraordinary, but well recognised fact, that in dealing with such an intimate and personal transaction as the investment of one’s money, large groups of the population ace apt to be swayed by mass excitement and to join in a rin-li of some description. “It is such a state of mind that is behind the average ‘run’ on a bank... The same thing operates in a different direction in the mass rushes to share the benefits of a mining or land boom or the staking out of claims On a mining area. This state of mind is well understood by certain unscrupulous promoters and financiers and they deliberately set Themselves to create it, as soon as conditions teem propitious. “The public accountant is now frequently looked to by his client for financial advice, and his methods of research and of testing should fit him for thus role. There is no need to urge any member of this calling to keep his eyes open for possibilities of enocuraging the employment of capital in safe expansion of industry. This is a national need. At the eame time, however, and by the exercise of the same qualities of good citizenship, wo think the warning contained in this article should be studied and taken to heart.”