Stock Market investments and sentiments

Often I hear in stock market investments that sentiment plays very crucial part in deciding the market trend?

I wonder many times, what it holds for the investors. Then what is the role of fundamental and technical observations on particular scrip or for a market.

How one comes to know what type of sentiment is prevalent in the market?

There are no proper guidelines for this. If one feels that market is good he goes and makes his investments and on the other hand if not some one sells and quit. It is nothing but an individual perception and it is ridiculous to generalize it without any time frame work. Therefore, what I believe is that there is no one side sentiment that reflects the market.

I get a different feeling when I look around. Even when the market sentiment is very good there are investors loosing money and like that if the market sentiment is very bad there are investor who makes money. Unlike other trades there are no inventories for the stock market investments wherein one can sell even at a loss and quit. This sort of flexibility is the only aspect that shapes the fluctuations and causes volatility in the market movements.

Sentiments are always extreme and whether you may name it pessimistic or optimistic. We have seen in the past that there is no a guarantee of a market reversal.

As long as one does not understand that the financial markets exist in the world of probabilities, not certainties one cannot enter the capital market to invest their funds.