Herd Instinct is a mentality in which the individual follows what their community or respected leader is doing. This has been humanly programmed to protect us from being left out of important events, to allow us to be accepted in our communities and innately so that we can survive long winters and starvation.
But when it comes to investing, choosing our careers and living our lives, sometimes it does more harm than good. The old investment advice you will hear over and over again is: “Buy Low, Sell High!” This is fundamentally difficult to do and only part of the truth. It doesn’t really take into consideration that buying low would mean that you are buying when everyone else is selling (AKA: Buyers Market). However, with Herd Mentality, we often buy high – when everyone else is buying (AKA: Sellers Market).
Think about it for a minute. We all know the rules of the game, but we simply cannot execute due to our trained Herd Instinct. So we often lose out on opportunities to actually benefit from real gains in the market, purchase real estate at extremely discounted prices, or discovery a career/business that pays really well that has very little competition.
Why do you think insiders and those privileged with information do so much better than the rest of us? Not only can they control the market but they are also the first to predict these trends and act on them prior to the rest of us mortal humans. An interesting book from Harry S. Dent Jr. “The Sale of a LifeTime” has sparked interest in rogue investors but has been turned away by most Financial Brokers as unfounded rumors. I am not suggesting or supporting one opinion or another, but think about the risks and opportunities that present itself should something such as a major market crash become reality.
Most of us have no access to this information nor are surrounded by trend-prediction experts, but what we do have is the desire to better ourselves. The best way to get closer to the action is to expand our knowledge and acquire as much information as possible; consistently. Knowledge is not only power, it is directly related to wealth.
Neo B. Concio, Author: “The Millionaire Employee: Simple Steps to Freedom”