Glossary - ChicksX

Herd Behaviour is when investors follow others instead of independent analysis, often leading to market bubbles or crashes.

Herd Behaviour is a phenomenon where individuals mimic the actions of a larger group. This often occurs in financial markets. Investors follow trends set by others instead of conducting their own analysis. This behavior can amplify market movements. It leads to bubbles when prices rise excessively due to collective enthusiasm. Conversely, it can cause crashes when panic selling ensues. Herd Behaviour undermines market efficiency and can result in significant financial risk. Understanding this behavior is crucial for investors. It helps them recognize irrational trends and make more informed, independent decisions. This can lead to better investment outcomes.