[goodmythical]

I've never understood why people separate some mystical magical "market psychology" from the traditional supply and demand model.

Like...what do y'all think demand is? From tulips and cabbage patch kids to meme coins and nfts, the price fluctuates based on semi flexible supply and highly flexible demand.

You could say "ah well, according to my analysis of the market psychology of this asset, I believe price will collapse in the medium term." but I just don't see how that's any more useful than saying "I believe demand will decrease soon" or "People aren't going to want this thing forever"

[seanhunter]

I broadly agree, but the place where psychology comes in in the continuous auction process. Just like a conventional auction, when prices start to go up, some people get overexcited and bid things up further, and conversely when people become terrified and stampede for the exits, selling assets at prices that are below any reasonable fundamental value. In the supply/demand model this is essentially the stock transitioning into being a Veblen good (where demand rises as price rises) and whatever the opposite of that is called, which is an interesting phenomenon and afaics purely psychological with no rational basis (unless you think greed/fear is rational I suppose)

That said, when people claim to distill the market psychology into a single recap or analyze the market psychology to predict future price, that's pretty much nonsense.

[skybrian]

The prices for stocks, particularly growth stocks, are very future-oriented. It’s less about what they’re doing now and more about where you think they’ll be in a few years. When we’re all reading the tea leaves, it’s not surprising that investor vibes play a role.

Current sales figures are more closely based on what people want to buy now.