The Herd Effect: Why Going Against the Flow Doesn't Make You a Genius
When it comes to investing, it's easy to get caught up in the hysteria of the masses. The herd movement can be overwhelming, especially when everyone around you is buying or selling an asset. But is going against the grain always synonymous with genius?
Warren Buffett, the legendary investor and strong critic of our
#Bitcoin❗ , often says that "the price of an asset is determined by market sentiment, not by its intrinsic value." He takes advantage of moments of panic to buy low and sell high.
However, it's important to remember that going against the herd can lead to getting trampled. It may just be a matter of perspective and patience.
As I said in my previous post, the Fear and Greed Index, developed by CNN, is a good indicator of market sentiment. When fear is high, prices tend to fall. And when greed is high, prices rise.
But here's the point: the market often only sees the short term and at that moment you can indeed capture opportunities. But from another perspective, the market may be changing (as now with
#donaldtrump leading the world's largest economy understanding the strategic relevance of
#criptonoedas and
#blockchains and leading to a new era with regulated markets and large institutional and retail adoption, causing the world to reposition itself. A herd that pushes the fear and greed indicator to the extreme. Obviously. But that's not necessarily a sell signal, right?
So don't get carried away by the herd but
#DYOR and consider whether it doesn't make sense to follow it.
If you want to discuss more about investment strategies and how to avoid the herd effect, follow me here on Binance or leave a comment. Let's share ideas and learn together.
Don't forget to buy your Bitcoin and see you in the next post.
Oh, here's the picture of Dumbo. An elephant that flies :)$BTC