Don’t Follow The Herd, Buy STAG
- History suggests that large groups can be wrong but we refuse to believe it.
- Always remembering that if people in masses are buying, then there must be someone who is selling.
- STAG’s fundamentals are getting stronger, yet the “herd” does not recognize it.
Many investors tend follow suit, that is, they follow the herd mentality, buying or selling stocks when the majority stampede to the trading desk.
While it’s tempting to follow the newest or hottest investment trends, an investor is better off steering away from the herd. It is not necessary that just because everyone is jumping into certain investments, that investment is correct.
The soundest advice is to always do your own homework before following trends, oftentimes a particular investment favored by the herd becomes overvalued as investments of high values are based on optimism, specific good news of the company and not on underlying fundamentals.
Also, herd mentality prevents you from buying at the bottom as panic sets in, that’s what I call the “deer in headlight” syndrome.
But it’s the smart investors who start buying and ultimately the herd investors play catch-up when the market starts going up. The herd mentality will also prevent you from getting out before the market peaks.
History suggests that large groups can be wrong but we refuse to believe it, always remembering that if people in masses are buying, then there must be someone who is selling.
It’s the smart investors who are selling when herds are buying and getting into a trap. That’s why Warren Buffett famously explained,
“Be fearful when others are greedy, and be greedy when others are fearful.”