“The psychology of the investing herd moves in a regular, pendulum-like pattern—from optimism to pessimism; from credulousness to skepticism; from fear of missing opportunity to fear of losing money; and thus from eagerness to buy to urgency to sell. The swing of the pendulum causes the herd to buy at high prices and sell at low prices. Thus, being part of the herd is a formula for disaster, whereas contrarianism at the extremes will help to avert losses and lead eventually to success.” — The Most Important Thing: Uncommon Sense for the Thoughtful Investor by Howard Marks
If everyone’s wearing it, don’t.
If everyone’s saying it, don’t.
If everyone’s on board, look for another boat.
If everyone is going there, go somewhere else.
If everyone is reading it, let them tell you what its about and you go read another book.
If everybody’s doing it, you know what to do…run…run for your life in the opposite direction!
Long before Howard Marks pointed out the danger of following the herd Jesus addressed this issue when he said:
The ONE THING for today: Don’t be different and difficult just because, but remember, the contrarian usually has the best chance of survival and success.