The tendency of individuals to follow the actions of a larger group, often without considering their own analysis or judgment.
Herd mentality can lead to poor investment decisions, as investors may buy or sell assets based on the actions of others rather than thorough research or analysis. This behavior is often exacerbated in times of market volatility, where fear or greed can prompt mass movements in the market. Recognizing this tendency can help individuals maintain a rational perspective and make more informed financial decisions, ultimately contributing to their journey toward financial freedom. By understanding herd mentality, investors can avoid pitfalls associated with emotional decision-making and strive for a more disciplined investment approach.
The greatest risk is not taking one, but following the crowd.
