The Herd Mentality – Behavioral Bias – Value Investing

Herd mentality


The Herd Mentality – Behavioral Bias – Value Investing


By whom, you got inspired in life ?


Many of us, heard this above one and i could not know how many were really inspired. Some one tells, ‘ I love this man Mr. A ‘, and the other one, ‘ She is absolutely a fabulous person‘, ‘ He is my inspiring leader and motivator ‘.ย  Got Inspired is a special one, when you follow a person, who already got succeed and this may help to quick up your life – Financial or Literate.

No doubt, Inspiring is a special one on thought. But, have you influenced by someone or something ? The worst trap ofย  these days is just influencing by misguide. There are lot of Media exposure, Social Networking that easily influenced everyone to nothing. Really, no need to compromise on this regard. Some one just throwing the useless information to the public, that leads to the herd.

May the Influence using this to get rid for publicity, defamation, spoilt the competitor’s brand, or nothing at all. But, it creates a herd mentality. Nowadays, we can see how we are using the Social Networking sites like Facebook, Whatsapp, or to Tweet. And we were also receiving so many messages in our box, which is a malicious one – Not for the one, but for the Society too. Someone sending the useless information or a content that divulge your attention and you are doing the same without verifying that is true or not. It creates the herd and so much controversy are doing on behind.

So much noise created as herd mentality, especially on Health, Economy, Industry, Employment and even in our daily life. Fake on Messages and Emails were sent. Nothing as true, but it creates a disturbance to tell a such a misguided one. As the Same, we are doing in our Personal Finance and in the Stock Market.

We think that we had so much information on hand or just following the influencers. Even, you do not know, what about the influencers’ target or its advertising. You are following and forwarding the same and fell in a dangerous trap. You do not aware, how they are using and manipulate the things around you. On crowd of the media today, someone advertising that you can eat this food for a healthy life. And the same time, the another one saying you don’t eat this one and cause dangerous to your health. So, on behalf of this message, how would you validate ?


How to avoid the Herd Mentality ?


Herd Mentality is one of the behavioral biases, is an uncertainty effect and a belief that the others may have better information on Investment choices. So, it leads to influence and make wrong decisions on Investment. We can see in the stock market everyday, someone called him as Adviser and tells a word, ‘Investment Tips’ in the media. Suddenly everyone watching this and by doing themselves to follow on regard. Even, we are not going to validate this tip, but simply putting our money and lose in the near or far. It often lead to the Bubbles and Crashes in the market. That’s why i referred a quote by warren buffet in my last post. ” The Rich invest in time and the poor do this in money “.


  • Be fearful when others are greedy and be greedy when others are fearful. This is a warren buffet’s quote. So, Don’t rush to buy the stocks in the peak level, even someone recommends in the media or your friend. See the Value investing, and analyse the fundamentals and wait for the fair price to get it. Looking for the correction and get to it. Don’t participate in the crowd and avoid it – The Herd.


  • Stick with your financial goals and make decision yourselves – An Informed decision. If you have any confusion on decision making, you can appoint a Certified professional for your financial goals – An Investment Advisor, Financial Planner.


  • Learn yourself and collect the adequate information for validation. Identity and confirmation is a better option to avoid these herd mentality.


  • If you are not satisfied with anything or anyone’s information, say NO for that. No need to agree immediately. It’s your choice – Disagree before you agree.


Herd Mentality is also referred as ‘Mob Mentality‘ or ‘Group Think‘. It showing that the humans and animals respond to the external change with very low levels of getting knowledge. Investing Strategies on based on value investing also helps to avoid the effect of herd mentality. You can get inspire, but not influence by someone !


Kindly share your views / comments with a smile ๐Ÿ™‚











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