Video
Herding Bias: Beware Following the Crowd
I’m Hannah Whatley, an advisor with Rather and Kittrell.
Herding bias is when we follow the crowd for the sake of saving the time and energy that it takes to make a decision on our own. We see this when people hear about an investment that friends or coworkers are making money off of, so they invest in it too.
It feels as if there is safety in numbers. The problem is, the crowd is often wrong. Even when it’s our trusted friends. Think about Game Stop recently. To avoid herding bias, it’s not as if you have to disregard what everyone around you is saying, but make sure how you manage your wealth has nothing to do with what your friends are invested in, and everything to do with what is most important to you.
If you’d like to discuss this, visit us at rkcapital.com.
