Go Against the Herd

"I find that it helps to break down the big picture into smaller achievable tasks and to recognise and celebrate these achievements along the way."
-Katherine Hann
March 2, 2017

Go Against the Herd

By Katherine Hann

Go Against the Herd


Go Against the Herd


Investor behaviour often appears to go against both logic and reason.

Investors are people, and people are subject to behavioural biases. Not only that, they are rarely experts in the field of investment knowledge.

Behavioural finance states that when it comes to investing, people often exhibit herding behaviour or a ‘group thinking’ mentality.

Most investors don’t like losing money even though they know that this can happen when investing in the stock market. This irregularity can lead to
panic selling during market setbacks.

Herd-following investors typically buy shares when everyone else seems to be buying and prices are rising – only to sell when everyone else seems to be
selling and prices are falling. In other words, they “sell low and buy high.”

To avoid this fundamental investment pitfall, a good financial adviser will help you: 

  • Set clear and appropriate investment goals.
  • Develop a suitable long-term asset allocation for your portfolio, taking into account your goals, your risk tolerance and the need to diversify your
    portfolio to spread the risks and opportunities.
  • Stay committed to your appropriate long-term investment strategy through periods of market uncertainty and in spite of the actions of the market herd.

There are some simple solutions:

  • Have a financial adviser to coach you through market uncertainties.
  • Set suitable goals and stick with those goals if still appropriate.
  • If you are worried about something, talk to your adviser.

If you would like to know more about investing, contact Katherine Hann on 08 8299 9927.