Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


“Don’t be a sheep !”

“Don’t be a sheep !”

Silently nod our heads, acquiesce, become meek and accepting. Sure it feels safe, comfortable, yet we know it is wrong at some level but... we just ... go with the flow. This is called herd behaviour and it is programmed into us at some base level. It probably hails back to the African Serengeti when your great (x 80) Granddad was running for his life from some marauding beast intent on making him his dinner.

“Don’t be a sheep,” is often said in order to get people to think for themselves, be independent and “don’t follow the crowd.”

Sheep are not noted for their independence of thought. They follow each other and remain part of the flock. Sheep get sheared and end up as lamb chops.

Sheep-like behaviour is a good example of group or herd behaviour. This is how groups of people and sometimes entire nations can often reach consensus and act in unison and this can lead to ‘herd behaviour’.

Humans have an extraordinary ability of surrendering their individual beliefs in group settings. We frequently abandon our rational thought. We often will ‘follow the leader’ en masse rather than ask hard questions and question the consensus or authority.

If the group are incorrect in its belief or course of action, it is less likely that the mistake will be identified and corrected.

This is frequently seen with regard to money. Throughout history, from the Tulip Bubble in 1637, to the Dot-com crash in 1999 and recent property bubbles, investors have frequently been too eager to buy when they should be careful and have been fearful when they should be buying.

When the herd is ‘flocking’ or ‘piling’ into an asset and it is the talk at dinner parties and throughout society, it is time to be cautious. When the herd frowns upon, is nervous or fearful about an investment, it generally means it is a good opportunity.

When there is too much greed - generally everybody has bought and prices have risen to successive record highs. When there is too much fear - generally everybody has sold and prices have fallen in value creating opportunity.

The problem is that in our interconnected world economy there are vested interests that go out of their way to manufacture demand. If we have learnt anything over the past two decades is that there are no infallible masters of the universe when it comes to economics, no experts that know everything. Central bankers can be and frequently are bonkers.

Bankers can and do lend recklessly, many auditors cannot audit and consumers can and do behave irrationally. And politicians, well don't get me started!

Those who have protected their wealth throughout history are ones who think for themselves and are independent of thought. They have the foresight to go against the HERD.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Scoop Business: Equity Crowd Funding Carries Risks, High Failure Rate

Equity crowd funding, which became legal in New Zealand this month, comes with a high risk of failure based on figures showing existing forays into social capital have a success rate of less than 50 percent, one new entrant says. More>>


Scoop Business: NZ Migration Rises To 11-Year High In March

The country gained a seasonally adjusted 3,800 net new migrants in March, the most since February 2003, said Statistics New Zealand. A net 400 people left for Australia in March, down from 600 in February, according to seasonally adjusted figures. More>>


Hugh Pavletich: New Zealand’s Bubble Economy Is Vulnerable

The recent Forbes e-edition article by Jesse Colombo assesses the New Zealand economy “ 12 Reasons Why New Zealand's Economic Bubble Will End In Disaster ”, seems to have created quite a stir, creating extensive media coverage in New Zealand. More>>


Thursday Market Close: Genesis Debut Sparks Energy Rally

New Zealand stock rose after shares in the partially privatised Genesis Energy soared as much as 18 percent in its debut listing on the NZX, buoying other listed energy companies in the process. Meridian Energy, MightyRiverPower, Contact Energy and TrustPower paced gains. More>>


Power Outages, Roads Close: Easter Storm Moving Down Country

The NZ Transport Agency says storm conditions at the start of the Easter break are making driving hazardous in Auckland and Northland and it advises people extreme care is needed on the regions’ state highways and roads... More>>


Houses (& Tobacco) Lead Inflation: CPI Up 0.3% In March Quarter

The consumers price index (CPI) rose 0.3 percent in the March 2014 quarter, Statistics New Zealand said today. Higher tobacco and housing prices were partly countered by seasonally cheaper international air fares, vegetables, and package holidays. More>>


Notoriously Reliable Predictions: Budget To Show Rise In Full-Time Income To 2018: English

This year’s Budget will forecast wage increases through to 2018 amounting to a $10,500 a year increase in average full time earnings over six years to $62,200 a year, says Finance Minister Bill English in a speech urging voters not to “put all of this at risk” by changing the government. More>>


Get More From Scoop

Computer Power Plus
Search Scoop  
Powered by Vodafone
NZ independent news