Herding is doing what the crowd does because the crowd is doing it, not because you checked it yourself. It feels safe. It often is not.
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Humans feel safer in a group, even a wrong one. Watching a price rise while others pile in triggers the fear of missing out, which overrides checking the facts.
A price can double in weeks purely on crowd buying, with no change in what the company actually earns. When the crowd leaves, the price has nothing underneath to hold it up.
By the time a trend is obvious enough for everyone to notice, much of its move has already happened. Joining late means buying near the top others are about to leave.
Social media tips, a sudden spike in searches for one stock, a chat full of the same name: all signs a crowd has formed, not proof of anything else.
A crowd buying something is a fact about the crowd, not about the thing. Check it yourself first.
Do it today
Wait 48 hours before acting on a social-media tip.
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