I like the part about out of season breeding. The site about sheep is especially apropos. It addresses my point about panic/euphoria, ie the herd mentality, sheep are led to slaughter or run over cliffs because of things that lead them or scare them. Investors are often much the same. Buying because someone entices them or selling because something scares them.
Every year especially around Sept/Oct, people are led into a selling panic, usually for no good reason, just a reaction to superstition, and all the negative hype the big boys put in the paper. The large houses love this, they have already sold, and are just waiting to buy back cheap, cheap, cheap. If people would just invest with fundamentals in mind, this would not happen. However, this is probably too much to hope for.
Momentum players take advantage of these swings, exacerbating the move, one way or the other. Folks need to do their DD and make up their own minds, and stick with the decision. Not base their moves on what others are doing so much. If one of the herd thinks they see something, they jump, that causes the next to jump, and pretty soon the whole herd is running...they don't know why, except all the rest are. This has the effect of making them pawns in other peoples games.
People that take advantage of these emotions. |
