Herd behaviour on the stock market

Herd behaviour is a deeply rooted psychological instinct: when everyone around you is doing the same thing, it feels right to join in – even if it's irrational.

On the stock market:

• Euphoria phase: "Everyone's making money with share X – I have to get in too!" → prices are inflated (bubble)
• Panic phase: "Everyone's selling – I have to get out too!" → prices crash excessively (crash)

The paradox: the best time to buy is when everyone is afraid. The worst: when everyone is euphoric. Exactly the opposite of what instinct tells you.

Remedy: an ETF savings plan with a fixed amount. You buy automatically – in good AND bad times. No emotional decision needed.