Conformity: the fear of deviating from the trend

Hao Xuguang

(Source: "Shanghai Securities News" 2016-7-18）

The herd mentality when investing in stocks is more about individuals hoping to find sources of information from others. And this is often because you have not done enough homework, so you are not sure about your independent judgment, and you lack security and self-confidence. At the same time, he also wants to shirk responsibility and dare not make judgments, so he uses other people's judgments as his own basis.

You go to a strange city and when it’s meal time, you face two similar restaurants on both sides of the road. One is crowded and the other is deserted. How would you choose? Most people will choose the restaurant with the most people. Why? It's simple, just follow the crowd.

In the process of w88 online casino investment, it is difficult for investors to avoid being influenced by the media, w88 online casino reviews, and peers, and it is difficult not to follow the crowd. Therefore, how herding affects investors and how to overcome the influence of herd is a big topic that needs to be studied.

A change in a person’s behavior or opinions caused by real or imagined pressure from a person or group is conformity. Manifested as a tendency to yield to perceived group pressure in situations of free choice.

Why do people follow the herd? Because of the influence of information and norms. Information influence refers to people's tendency to conform when they regard others as a source of information that guides their behavior and thus comply with their behavior. Psychological research shows that people tend to conform when the situation is ambiguous, when the situation is critical, and when someone else is an expert. Conformity is based on the need to confirm the true situation and stems from the inner desire to be correct, especially when the situation is uncertain, to find a reference for behavior, so it is believed that other people's interpretations of ambiguous situations are more correct than one's own. It’s easier to follow the crowd when you don’t have the ability to judge yourself. In unfamiliar environments, the behavior of others serves as a reference. When people shop online, they first look at reviews from previous buyers, also because they are looking for information sources.

Normative influence refers to the fear of deviation and the desire to conform to others. Because if you don’t follow the crowd, you will often be unpopular in the group.

w88 online casino investment herd is often based on information influence rather than normative influence. One important reason is that an investor's w88 online casino investments are not threatened by being in line with the crowd if they are different. The herd mentality when investing in stocks is more about individuals hoping to find sources of information from others. And this is often because you have not done enough homework, so you are not sure about your independent judgment, and you lack security and self-confidence. At the same time, he also wants to shirk responsibility, dare not make judgments, and regard other people's judgments as his own basis. Therefore, when making decisions, they rely too much on others and the media (that is, the opinions that have a significant impact on most people in the market) and less on their own information.

According to the author’s observation, last year6Shanghai Index surged in the first and middle of the month5000When the market is above 14080 points, almost everyone is talking about stocks. They are talking about stocks everywhere. Almost everyone is a w88 online casino god. "Pigs are flying in the wind." Seeing neighbors, colleagues, classmates, and acquaintances all therew88 online casino trading, If you don’t do it yourself, you will suffer a loss. In this atmosphere, people feel as if they will suffer huge losses if they don't enter the market. But who would have expected that within a few days, thousands of shares would fall to the limit and trading of thousands of shares would be suspended?

During the operation, w88 online casino investors constantly exchange stocks, chase the rise and kill the fall. One important reason is to follow the herd: they always feel that the stocks in their hands are not rising or are rising slowly, and they are looking for news everywhere. Regardless of whether you care when chasing highs, you will often chase the top of the w88 online casino price. There was a swarm of bees when they were killing and escaping, creating a situation of multiple kills and many trampling on each other. Moreover, you often start running away when you see people around you falling, so your operations often lag, and you often cut your flesh on the floor when falling. Such an operation has little overall profit potential.

In fact, in this world, there are always only a few who are rich, excellent, and successful. The majority are ordinary people who are not very successful. Therefore, the thinking, opinions, behavioral characteristics and habits of most people are often far away from, or at least not close to, wealthy, outstanding and successful people. Most of the surface information that most people have access to is of little value. Exclusive information is of great value. Therefore, the opportunities and information that most people can see when they say they are good are not necessarily good opportunities. Most people are speculating in stocks, which just means that the market will fall, or at least be close to falling.

Psychological research shows that individuals with low levels of skill, unstable emotions, weak self-concept, low need to maintain their own uniqueness, low desire for personal control and low social status are prone to conformity.

Excellent people don’t like to follow the crowd. The more crowded a place is, the less successful investors will join in the fun, because the value of a crowded place has been almost fully exploited. Mark Twain has a famous saying: "When you side with the majority, you should stop and think." For exampleWarren Buffett, at1987Black Monday of 2019, when Wall Street giants lost as much as30%At the time, he was quietly reading the financial statements. in2008During the financial crisis of 2008, when almost everyone thought that the golden age of investment banking was over, he bought Goldman Sachs shares. Later facts proved how correct he was in the opposite direction of most people.