Herd behaviour
Also called: herding, herd mentality, FOMO, fear of missing out
Doing what other investors are doing because they are doing it, rather than because of your own analysis or plan.
Herding pushes prices too high in booms and too low in panics. Fear of missing out, the discomfort of watching others make money, draws in buyers late, after prices have already risen. A crowd buying is not evidence that the crowd knows something.
Learn more in these lessons
- Herd behaviour and recency biasWhy do investors pile in at the top and sell at the bottom?
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