The Psychology of Speculation
Author: Henry Howard Harper
Publisher: Fraser Publishing
Burlington, VT 05402 (802) 658-0322
The Psychology of Speculation by Henry Howard Harper was first published in 1926. The underlying
theme of this slim volume is as contemporary as anything written today, with its focus a warning against
speculation, or at least uninformed speculation. Many try, but few beat the market, and the reason,
according to Harper, is a lack of self-knowledge on the part of the speculator.
Harper catalogs several of the many ways that the unwary, or even the experienced, are parted with their
money. The traps have not changed substantially since this book was published 64 years ago. It is
dangerous now as it was then to underestimate the strength of a trend, and still just as suicidal to buck a
trend, even when there are logical reasons to presume the tide will turn soon. Bear markets still continue
to go too low, to the point of undervaluation. Bull markets still continue to take prices past the point of
fair value, and there is still no easy way to say exactly where the process will end.