The thing about herds is that no one thinks they’re herd…
Do you run with the herd?
No, of course you don’t. You don’t think of yourself as part of the herd. You’re not a fearful sheep or an instinct-driven cow.
You’re a free thinker. You walk your own path. They should name a fragrance after you.
And look, the fact that you’ve made it this far – the fact that you’re reading these blogs rather than nom’ing up whatever grass the main-stream media puts in front of your over-sized nose – that means you’re already inclined to independent thought and critical media consumption.
Good for you. That’s awesome.
But think about this: how many people self-identify as ‘herd’?
“I used to identify as gender non-binary, but now I identify as bovine.”
Seriously though. Who identifies as herd? Is there anyone out there who says, “My investment philosophy is to just do whatever I see everyone else doing and hope that it works out.”
Of course not. The interesting thing about the herd is that every individual within the herd thinks that they are acting independently and following their own self-interest.
Herd dynamics don’t emerge out of a shared, collective desire to be herd-like.
They emerge out of independent individual action spontaneously synchronising into herd-like behaviour.
So this creates a problem.
If you say that you act independently and don’t “follow the herd”, I would say that every individual in the herd would say the exact same thing.
So how do you know you are genuinely acting independently, and how do you know that you’re not, in fact, just one of the herd-lings with delusions of agency and independence?
Well, how do you?
This is tricky.
The people who buy late into every bubble – whether that was Bitcoin in 2017, or the Tech boom in 2000, or Tulips in the olden days – they didn’t think they were part of the herd.
They all thought they were part of the visionary or early-adopter cohorts
Same story with people who sell out right at the bottom of the cycle – at those moments of maximum panic.
They’re not thinking, “Well the herd is really panicking now. I better join them.”
They’re thinking that things are about to get whole lot worse, and that they better get out before the herd comes to the same conclusion and tramples them.
And this is the thing. When you’re herd, you don’t know you’re herd.
The antidote, I think, is education.
Education and more education.
The more you educate yourself – the more you get a feel for the landscape and learn who to listen to and who you can trust – the more inoculated you are to ‘herd think.’
The more of this experience you have – the more you come to understand your place in the herd. Are you one of the leaders and independent thinkers on the fringes? Or are you smack bang in the middle?
The market is about to test us. So far we haven’t seen anything that has spooked the market, but my bet is we will.
The herd is going to panic and freak out.
Time to ask yourself now. Am I going to go with them?
Or do I know myself and know where I stand?