Why do investors follow the crowd? Understand herd behavior

Herd effect: the danger of investing like everyone else
Following the decisions of the majority is common behavior and, in economics, it is called herd behavior. The trend causes many people to invest in a certain asset just because it is attracting more and more investors.
This movement usually gains strength in times of rising markets. With more buyers, prices rise, reinforcing the perception that investment is a safe bet, even when the appreciation does not reflect the real value of the asset.
Episodes such as the tulip bubble in the Netherlands, the technology company crisis and the 2008 financial crisis show the risks of this behavior. Experts warn that consensus is not a guarantee of success and that collective enthusiasm can increase exposure to losses.
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Source: G1