I am currently reading The True Believer: Thoughts on the Nature of Mass Movements by Eric Hoffer. It was written more than fifty years ago. But it is still very relevant. Eric writes from real-world experience, not from the confines of ivory-towers. I first heard about this book from Paul Kedrosky.

I had always been fascinated by mass psychology (the madness of crowds if you will). I have been astonished by seemingly logical people falling prey to religious and political cults and Godmen’s sleight of hands. The above link to Sundar Iyer’s website points to a number of links displaying the madness of cults.

In capital markets, this is equally visible. Mass psychology makes one understand how we never really evolved from colonies of Ants. Ok, maybe that is a overstatement. But a substantial part of humanity finds solace in going with the crowd, letting other people think for them instead of using their own brain, and finding depth and meaning in an outside cause.

While I believe altruism is alive and well, and necessary for humanity’s welfare, the line between individual altruism and a mass movement towards a religious, political cause is very wide indeed. Most adherents to mass movements mistake these two.

Eric Hoffer’s book is a must read for anyone who wishes to understand the contemporary events in the world.