“Even the most intelligent investor is likely to need considerable will power to keep from following the crowd” —Benjamin Graham, from “The Intelligent Investor”
To our clients and friends:
Over the course of recent newsletters, I’ve been writing about the hazards of following the crowd when it comes to investing. The fact is that it is never a good idea to do so, regardless of how persuasive the “talking heads” on television may appear. Instead, it seems far more prudent to approach investing with a skeptical eye, and as a contrarian thinker.
It is important not to casually dismiss indicators such as investor sentiment, especially when they point to increased market risk. Of course, overriding all of this is the fact that knowledge is king. Knowledge—and information—neutralizes potentially dangerous biases (and ‘head stuck in the sand’ syndrome).