![]() They seek investment allies.įollowers listen to others. Followers are strongly influenced by recommendations-from researchers, the media, friends and family, and internet boards. Rather than walk past lines, they join them. More common than loners are followers, who derive comfort from crowds. Loners do not always benefit from having large egos. (A little knowledge can be a dangerous thing.) Once out of equities, they have trouble getting back in, because doing so before stock prices collapse would be a tacit admission of failure. This error has happily become less frequent, because market-timing has become unpopular, but loners nevertheless tend to exit the stock market, believing they have identified an upcoming bear. Loners constantly face the possibility their “insight” is instead self-delusion-the mistaken impression that they have spotted what others missed.Ī related problem is bear traps. Sometimes, wisdom does in fact lurk within the crowd. For each dollar they stashed in Tesla or bitcoin, loners squandered thousands on investment dreams that never materialized. Unfortunately, not all that glitters is gold. Before Tesla TSLA was mainstream, it was owned mainly by iconoclasts who discovered its story. Overall, though, loners are the likeliest investor type to sift among discounted securities, seeking bargains.īesides receiving “dead cat bounces” from securities that are deeply depressed, loners may also profit from the opposite form of investment: highly expensive emerging-growth stocks. Stock mutual funds sometimes receive inflows after market declines because the overall marketplace believes that the dip presents a buying opportunity. Loners are not the only investors who try to buy low. They will instead go on their way while pitying the line’s occupants. Should they see a line snaking around a block, they will not try to learn what they are missing. Such investors ignore the actions of the crowd. They consume investment research neither for its counsel, nor to learn what others are doing, but instead as grist for the mill. Investors who belong to this group make their own decisions. ![]() This article outlines the strengths and weaknesses of the three prevailing mindsets. (Although not all: My wife’s ancestry report reads “99.6% Eastern European.”) But there’s no question that personalities affect investment behavior. As with heritage, most people have blended traits. Few investors neatly conform to a single description.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |