Investing With the Herd: Worse Than Being Scammed 🚀🚀

Ever since the beginning of life in a society, humans have always been the sufferer of his own natural error-producing ways. Some intellectuals will even tell you straight that humans are weakasses---easily tempted, distracted, and even manipulated. What a pity, it's like being a pet in a household, isn't it? To worsen this anthropological and scientific attributes of humans, these vulnerabilities also hold a great deal of responsibility and unluckiness when it comes to how we handle or finances--how we spend, invest, earn, and save--and this is not just because of oneself, but because of the majority that has always used its power to rule over the society. Now that is herd behavior.



Herd behavior is about how individuals in a group act in accordance to the majority's ways without any centralized direction but with just that pure herd mentality--to keep up with the gang. Like I have previously discussed in a recent article, we people are easily carried by the river of trends and things the majority of people in our own fields do. In investing, it is inevitable for a person to not want to feel involved in a group due to that fear of missing out I have also explained in the said article. Now, enough of the blame on one's own tendency to commit all these errors. Let's talk about the mob...

Herd mentality historically began when people started copying or doing as what the people in the higher social class would do when it comes to consumption or their consumer behavior. Obviously, the people outside the high social status group experienced a great deal of painful money burns in their course of keeping up with the elites who probably did not worry at least one bit when it comes to the way they purchased a lot of mostly useless stuff. This just shows how people despite their available resources would go beyond their means to keep up.

Social psychology has always said that people are molded as socializing individuals whose goals include feeling part of a certain group of his/her own liking. And yes, to the point that when it comes to investments, some people would risk so much without looking any further into their current status and the whole deal with the market and all the necessary information just so they would not miss out as if they are not already missing out on what they are even supposed to not miss out on that such impulse is necessary. Funny how from that, bubbles keep appearing and people keep supporting. The power of influence from any group--sometimes even regardless of their number just as long as they make great impressions--make people forget their individual choices and ideas.



This is obviously dangerous. I bet there are a few investors right now under this spell, lost and in a great level of panic or anxiety when it comes to how things are going to work out for them because they have been bewitched by the charms of the herds all over the market who are preaching and publishing analysis like the Messiah of all the trades when in fact they are just as lost and are turning such state into the main and only perception for the whole community that is righteous for them to follow. You see, sooner or later the bubble you contribute in making in your pledge to these herds is going to burst and hit you with the cold harsh truth about what foolishness you had just committed.

As usual, there is no magic to snap out of it. Just maintain a clear mind that shall be able to surpass all those vague influences coming from ads or the people around you. YOU DO YOU--I know it's been said a lot of times, but it's the only way to go. Don't allow yourself to be summoned by the views of one gang that 90% of the time also does not know what the hell they are doing with their trades. Get up, work your ass off analyzing charts on your own. Do not be lazy to research and study all the factors involved in your investment plans.

references

• Investopedia
• My Social Psychology Notes

gif sources

• Herd
• People
• Danger