Don't Follow the Herd

Herd instinct in finance is a phenomenon in which investors gravitate to the same or similar investments because many others are investing in them. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

| Value Investing DON'T FOLLOW THE HERD Thank you so much for subscribing to Investopedia's Introduction to Value Investing. You've come to the final installment. In closing, we leave you with one of the most intangible--and most difficult--principles of value investing: Don't follow the herd. Needless to say, this is a matter of great controversy and detractors of value investing (those who believe that there are no hidden bargains) completely disagree, read on. Investing requires not just knowledge and capital, but patience and strong nerves. One of the hardest challenges most investors will face is to keep your head about you when those around them are buying or selling in a mass panic. In a recent HBO documentary, "Becoming Warren Buffett," the legendary investor explains this principle in his usual colorful manner, using a baseball metaphor: "The trick in investing is to watch pitch after pitch go by until you have one that hits your sweet spot. And if someone says, "Swing, you bum!" you ignore 'em." The art of silencing the crowd isn't something you can learn from reading--that comes with time and trial and error. Nonetheless, it can't hurt to read up on the many, many opinions experts have on this very central aspect of behavioral finance. The most important take-aways from this course are: 1. Look at the whole picture rather than relying on any one metric 2. Practice makes perfect! How informative was this series for you? Take our Value Investing Series Survey and let us know. Begin Survey » An Introduction to Behavioral Finance Curious about how emotions and biases affect the market? Find some useful insight here. Read Now » Understanding Investor Behavior Discover how some human tendencies can play out in the market, posing the question: are we really rational? Read Now » How the Power of the Masses Drives the Market Market psychology is an undeniably powerful force. Find out what you can do about it. Read Now » Market Problems? Blame Investors Investors are only human, and their irrational behavior can often move the market. Read Now » CONNECT WITH INVESTOPEDIA Email sent to: geezers.mail@gmail.com To update your newsletter preferences or unsubscribe, click here. 114 West 41st St, floor 8 New York NY 10036 © 2020, Investopedia, LLC, All Rights Reserved | Privacy Policy