10. Final Thoughts

When Vince Lombardi said, “Confidence is contagious. And so is lack of confidence,” I suspect that he didn’t have the stock market at all in mind, but his quote fits the markets better than anything I have read from the financial pundits. Rising markets reflect growing confidence levels, whereas falling markets reveal the reverse.

The beauty of changing confidence, though, is how consistently it reveals itself in specific actions. We do the same things over and over based on our individual and collective levels of confidence without realizing it or knowing why. As confidence changes, our natural preferences change along with it. And the great news for investors is you can see it all in real time.

Hopefully the principles of socionomics that I have shared in this book, along with my Horizon Preference framework, will help you as an investor watch for the confidence-related behaviors around you and to see these behaviors for the true market indicators that they are. Even more, I hope it enables you to separate value-destroying emotion from your decisions to buy or sell a security.