Herd Mentality

What is herd mentality?
It means to get influenced according to other people, do what majority of people, group or public are doing. Almost 99% of the population of universe preaches herd mentality and go with others to ride in the same boat. They feel what others feel and all their decisions are based on the people around them.

People mostly follow the herd mentality due to variety of factors:

Feel safe and secure - This is the most important factor which compels people to adopt the herd mentality. People tend to think themselves as a part of this world, society and thus associate themselves with the crowd. They feel that if they dare to defy others they may miss the bus to moon, so they don't bother much to think of their own and go with others. It's a common assumption as others are riding the bus, so let's go for the kill, either I will sink or rise with my group.

Lack of Confidence - People, who are not confident about their decisions, tend to go with herd mentality most of the time. Low of confidence they don't want to take a chance and always bother what if this decision of mine fails? But they never care to think what if our collective decision fails?

Laziness - Most of the people are lazy bums in this universe, when it comes to take their decisions and calculations. They love to go with others and they blindly follow actions of others and again feel too safe with others decision.
Let us analyze some common situations where people herd mentality is common,

1. Markets - What can be biggest example then our stock markets, when there was boom in the markets all over, people ignored many flaws and mistakes of this existent system. All thought that BSE sensex will touch 30000 soon and have lots of time to spare and enjoy before they die. But, all these times, we were just building castles in the air.

I can clearly thousand arguments supporting that since land and oil are most precious natural resources and both are limited. The population increasing everyday, so the demand of these natural resources will increase ever, so people bought them at whatever fancy prices the dealer offered and never cared for the interest rates. All they thought was that if we miss this bus, then we the ticket to moon. Most of them are hard paying prices for their foolishness and herd mentality.

Forget about the average individuals, many corporates were also not saved from this mass hysteria. Companies went on for the merger and acquisition spree, made some blunders and bought thrash companies at fancy prices. If you can go back to the history and search the Dotcom bubble, you will get numerous examples of this herd mentality and the onslaught of many companies for their herd mentality. All these buying spree will definitely put a huge debt and creating holes in the balance sheets. When the fire is out of control, now they are after people and banks for money. Cash is the king in these tough times and all who conserved cash in all those euphoric times without being a participant in the herd mentality can now look for loads of goodies at the same price.

I can clearly remember that during the boom time, tips and recommendations in the stock markets were flying cheap, even the auto rickshawalas and paan walas started to make the prediction of stock market. All the IPO's were oversubscribed many times, even those of small cap companies with no strong proved track records. People thought of these IPO's as the sure shot lotteries tickets. Now many of these companies are floating way below their issue price.

2. Career choices - There is a common consensus that choosing engineering or being a doctor is the safe heaven career. The sad part is that, parents are mostly responsible for this type of behavior. They tend to get assured after looking numerous successful examples of their friends, relatives or colleagues children. When this stock market boom started, people pushed themselves for MBA tag before their qualification and seizing every opportunity from this hysteria, the education institutions started exploiting the innocent minds and they charged some fancy prices for thrash quality of education they provide. Hundreds of colleges were opened up in a few years, but now these colleges find no students to enroll and also no companies to offer campus and all are complaining for the lack or loss of jobs.

Civil service preparation is a common all over the country, the main reason cited behind this is the service to country, but I raise one point, are there not other ways to serve our country? For me, its the herd mentality that dictates this behavior, others become convinced about its salary and the power it commands. It's also more common to measure and pursue after a job with the salary it pays at the cost of satisfaction of job what one serves. The sad part is that most of the parents are part of this evil and instead of guiding their children, where they can excel their best; they force their children to a career as per the established norms and rules of our society. This is where it hurts the most.

3. Daily life situations - consider these simple situations:
A child demands before his parents to enroll him/her for a private tuition; because he/she feels that his/her friends are getting something which he/she is being devoid of. The parents also see no harm in this since all the people are opting for coaching classes, they should send their progeny for the same else their career is at stake. God knows what they teach at these institutes, which the educated parents can't impart.

Nano is launched now; people are blindly considering pampering themselves with one, oblivious of the traffic chaos it will create in the roads. My mind is fully convinces that 3-5 years down the line, more and more people, will prefer bikes as compared to cars after this mess.

Work from home culture is slowly seeping in the Indian corporate culture, yet people find it difficult to resist their temptation to reach office at the morning hours when the traffic is horrific on roads. If one defies this trend and comes to office at odd times, he/she can save a lot of time in traffic.
Gadgets and gizmos are another area, where people tend to follow the herd mentality. The companies at times exploit this herd mentality and mass hysteria to their advantage. What more can be the best example than the apple ipod. It almost changed the balance into apples hands from being nowhere in the list.

It takes real guts or hard balls to against the herd mentality and to defy an established trend. You will be proved wrong every other day, by all these people there of this herd group. All will think you as out of mind and may be some maniac, but you need to just have a belief in yourself that some day you discover the light.

The day you discover the light in this dark phase, you will be the messiah for the whole of this herd and guide them into light. He/she is rewarded the most, who defies this trend and mentality, but the timing should be perfect else doom is imminent.

There is one common conclusion in all these things, we create this mess by following the herd mentality and when this mess is over, we keep complaining but at the end of the day, we are assured that thinking that others are in the same boat.

"Be fearful when others are greedy, and be greedy when others are fearful" - Warren Buffet.