“Following the Herd” Mentality

Herding in financial markets blog

Published in the Baltimore Business Journal on June 12, 2020

Herding refers to the instinctive habit of people to imitate the financial behavior of a majority. Herding is based on the idea that people feel most comfortable following the crowd and tend to assume that the consensus view is the correct one. In financial markets, this takes place when investors believe others to be better informed than themselves and follow them almost blindly, disregarding their own information and market fundamentals.

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