Herd Mentality
It is amazing how caught up in the herd people can get sometimes. A few start running in one direction and pretty soon it turns into a herd of hysteria. But what happens when a few people from the herd stop and turn around in the opposite direction? Just as when good old Forrest Gump stopped running, everyone suddenly becomes disoriented and confused. Some want to continue in the direction they were headed, but the overwhelming feeling of wanting to be a part of the group causes them to turn around and follow the herd.
There is always a herd running in some direction, whether it is the herd that proclaims the next dot com stock is going to go up in price forever, or the herd that is certain that the property they want to buy will double in value every year. Unfortunately, it is very difficult for most people to think outside of herd mentality. Now that the herd has stopped charging full speed ahead in the real estate market, many people are left standing disoriented and confused. Some people want to sell everything now with the same hysteria they had when they wanted to buy everything in sight. This has led to the drastic change in the real estate market, the rise in foreclosures, and a rise in the not so well known "short sales."
It is much easier to get caught in the herd mentality than it is to go against the flow. This fact is part of what makes herds so important. The herd is predictable. You can count on a herd to move together in one giant mass. The herd is also dangerous. You can count on the herd to shake the ground as it moves. The herd has no direction except for the direction it is going. Sometimes the herd can get lost. The herd only moves because everyone in the herd is moving.
We must stay outside of the herd, always watching closely. When the herd begins to run out of steam, it might be wise to head in the opposite direction (even though the herd thinks you are nuts!).
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