A smart move, as a matter of fact, usually.
Not always. Herd mentality, the frame of mind to follow the masses, both drives the stock market up, and down. When other people begin to sell, more people begin to feel the panic and they all start to sell. Hence, in consequence, the market crashes.
Alright, that’s herd mentality, or, if you don’t like animal connotations, crowd behavior. Same thing. No difference whatsoever.
Thing to remember is, sometimes even if there’s a crowd gathering, it doesn’t mean there’s anything going on. I came through a crowd in my neighborhood last month, for instance, brushing shoulders to make my way through people who were all kind of whispering something into each other’s ears. “What’s going on?” I asked our elevator man. “Oh,” he said, “there was a traffic accident two hours ago.”
Two hours ago?
“Nobody’s hurt”, he added, helpfully.
“That’s good,” I said, and we left it there.
Perhaps that’s the difference between the herd and the human crowd. Herds always gather for a reason. Humans gather for no good reason at all, and they linger on.
They should disperse and move on.
Or as Americans say, get a life.
Alright, here are media examples of “herd mentality”:
1. Friday’s 4 percent slide in the Dow Jones industrial average left the market barometer down 5 percent for the week, 27 percent since Sept. 1 and 37 percent for the year.
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