- Investors want to avoid a herd mentality
- But consulting with others could help avoid costly mistakes
There’s an attraction to moving in a pack – even for central bankers. Last month, economist Dario Perkins joked on X that “independent monetary policy is where everybody waits for the Fed to give them permission to cut rates”. Patrick Saner, head of macro strategy at Swiss Re, replied that rate-setters had “FOGF” – fear of going first. Domestic data will probably override safety in numbers, but there is no denying that it has a powerful appeal.
Investors can feel the same pull, too – and thanks to their sheer numbers, they tend to move as more of a herd than a pack. Sometimes this is understandable: studies find evidence of greater efficiency and safety in groups. But it can also have more negative consequences, especially in a world of online investment hype.