investing

5 behaviors shackle investment strategy

Following the herd
Next
3 of 6
Back
Following the herd

Following the latest investing fad and ignoring your specific goals can take you off the right course to fulfill your investment strategy and lifestyle needs.

David Krueger, author of "The Secret Language of Money," says that herd mentality, defined as the altered state of mind induced by the emotion of group momentum, is what happens when an individual investor abandons an investment plan in order to follow others in his or her peer group. Krueger says the emotional contagion can be due to -- and prolong -- a market bubble such as the Internet tech bubble of the late 1990s. It can cause emotional reaction in the opposite direction, such as the market crashes of 1929 and 2008.

According to Krueger, people make mistakes because they don't have a plan or don't stick to it when emotions run high.

"When herd mentality prevails, the emotion of the right brain holds sway over the logical and reasoned left brain, even at times seizing and holding it hostage," Krueger says. "Greed, emotional contagion and peer pressure trump logic."


 

 

advertisement

          Connect with us
Product Rate Change Last week
1 Year CD 0.89%  0.00 0.89%
2 Year CD 1.02% --0.01 1.01%
5 Year CD 1.59% --0.00 1.59%
 
View Rates in your area Search
advertisement
CD & INVESTING NEWSLETTER

Learn the latest trends that will help grow your portfolio, plus tips on investing strategies. Delivered weekly.

CDs and Investment

How can I pay myself first?

Dear Dr. Don, You often advise readers to "pay yourself first." It sounds like a fine idea. But I'm wondering how that actually should work. I'd like to know how much or what percentage of my income should be set aside... Read more

advertisement

Blog

Dr Don Taylor

ETFs in 401(k)s worth fighting for?

Should your employer's 401(k) plan let you invest in exchange-traded funds, or ETFs?  ... Read more

Partner Center
advertisement

Connect with us