Why Europe’s Warren Buffett Says 90% of the Stock Market is Pure Psychology
In volatile markets like these, an unshakable mindset is your greatest asset. Today, I’d like to share the story of André Kostolany, the legendary figure known as ⚡Europe’s Warren Buffett.
“90% of the stock market is dominated by psychology.” – André Kostolany
* Note: fiduka.com – Kostolany
His insights, distilled from 75 years of investing across a 93-year life, are simple yet profoundly philosophical. Today, we’ll dive deep into his legendary track record and his timeless principles.
✅ From Philosopher to Investor: A Master Forged by Failure
Born in Hungary in 1906, André Kostolany was originally a philosophy student who dreamed of becoming a pianist. However, at age 18, he moved to Paris at his father’s urging. There, he met a stockbroker named Alexandre and stepped into the world of finance.
His career wasn’t always a straight line to success. Kostolany went bankrupt twice. At one point, buried under mountains of debt, he even contemplated suicide. Yet, it was through these trials that he grasped the true essence of the market.
“Anyone who hasn’t gone bankrupt at least twice doesn’t deserve to be called an investor.”
This isn’t just a consolation; it means that only those who have survived the market’s ferocity and mastered their emotions can truly call themselves investors.
✅ Contrarian Investing: Turning Crisis into Opportunity
Kostolany was a master of ‘contrarian investing’ – seizing opportunities when others fled in fear. Here are three legendary cases that defined his career
⚡ 1. German Government Bonds: A 140x Return Found in Ruins
After WWII, Germany lay in ruins. No one believed they could repay their debts. But Kostolany bet on the German people’s diligence. Five years later, as the economy revived, he realized a phenomenal 140x return.
⚡ 2. Italian Fiat: Reading Between the Lines
While others feared Fiat’s bankruptcy, Kostolany noticed a shift in industry trends from textiles to automobiles through a small news clip about a manufacturing agreement. This insight yielded over tenfold returns.
⚡ 3. Russian Imperial Bonds: The 6,000-Fold Miracle
At age 83, he bought “worthless” pre-revolution bonds. His logic? For the Soviet Union to re-enter international credit markets, they had to settle old debts. He was right, and the returns reached a staggering 6,000 times his investment.
[André Kostolany’s Successful Investment Cases]
| Investment | Key Logic | Result (Return) |
| German Bonds | Trust in national character & recovery | 140x |
| Italian Fiat | Identifying industrial shifts (Textiles → Auto) | 10x+ |
| Russian Bonds | Prediction of debt repayment for credit | 6,000x |
Do you see a pattern in Kostolany’s success stories? He was an investor who instinctively knew when to invest boldly. And he possessed exceptional patience.
While most people realize profits immediately upon achieving just 2-3x returns, Kostolany had the patience to wait even for returns exceeding 10x, as shown above.
✅ Kostolany’s 5 Principles: Psychology is Everything
He believed understanding investor psychology was far more valuable than technical analysis.
⚡ 1. The Master and the Dog
The master (economy) walks, and the dog (stock price) runs ahead or lags behind.
Eventually, the dog always returns to its master.
Stock prices may diverge from economic reality briefly, but they always converge to intrinsic value.
⚡ 2. Kostolany’s Egg
A model for interest rate cycles. Buy stocks at the trough (low interest) and move to bonds/cash at the peak.
- Interest rate peak: Increase the proportion of deposits and bonds
- Interest rate trough: Increase the proportion of stocks and real estate
Understanding market overheating and downturns as an egg-shaped cyclical curve allows us to grasp where we currently stand.
⚡ 3. Blue-Chips and Sleeping Pills
“Buy high-quality stocks, take sleeping pills, and don’t look at them for years.” Frequent trading erodes wealth; patience builds it.
⚡ 4. Buy on Rumor, Sell on News
Prices move based on reactions to events, not the events themselves. Once the news is public, the profit opportunity has often passed.
💡 Insights for 2026 Investors
Kostolany achieved financial freedom by age 35, but he always said:
“Money earned from investing is ‘pain money’ compensation for suffering.” Investing is a lonely, psychological battle.
For 2026, remember these three things:
- Think Independently
: Don’t follow the crowd; build your own logic. - Cultivate Patience
: Ignore the noise and let your investments grow. - Use Your Imagination
: Look for the global shifts hidden behind the numbers.: Look for the global shifts hidden behind the numbers.
This content may feel somewhat fundamental. Isn’t that why investing is difficult?
Successful investors don’t have to be right 100% of the time, 51% is enough if you manage your losses and let your winners run. Let’s navigate the markets of 2026 with Kostolany’s wisdom! ⚡
This has been Michael from WStorybook. Thanks for reading!
