Investors beware — don’t all move to the same side of the boat

A herd mentality has developed with huge sums of money flowing into new investment vehicles and loss-making companies.

Sat, 27 Feb 2021

A common characteristic of frothy markets is when investors focus on the same opportunities, they effectively all move to one side of the boat at the same time.This occurred with investment trusts on Wall Street in the 1920s, with NZX-listed investment and property companies in the 1980s and with Nasdaq dot.com companies in the late 1990s.These mass movements usually occur when there is a huge increase in new market participants — individuals who start investing for the first time. The GameStop phenomenon on Wall Street has been a re...

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