Investing is the intersection of economics and psychology

Economics is related to the valuation of the company, it judges if, the company is undervalued or overvalued and how is the overall performance of...

Investing is the intersection of economics and psychology

Economics is related to the valuation of the company, it judges if, the company is undervalued or overvalued and how is the overall performance of the company while psychology is related to the investor who wants to make investment in that company. The psychology of investors influences the decisions like how much they should buy or at what price they should buy or for how long they should keep it, etc. The assumptions made under the economics and the assumptions made under the psychology are completely opposite. The former assumes people are rational but the latter believes that they are not fully rational. So, when economics and psychology intersect, a proper investment decision is made.