In an interesting article by Adrian Ash where he comments on the markets in property and gold, I was taken by the comment that:

Average behaviour won’t beat the average

His comment is apt as we are all too often creatures that like to heard rather than strike out on our own.  It is often the two simple emotions of fear and greed that drive us and prevent us from thinking clearly for ourselves.

Here is the extract

BUY LOW, SELL HIGH – it sounds simple enough. Yet the strategy eludes most people.

Most people are likely to buy what’s hot instead – like Tech Stocks in late 1999, oil futures in summer 2005, subprime mortgage-backed bonds in 2006, tulip bulbs in Amsterdam, 1624.

Average behavior won’t beat the average, of course.  Only extraordinary actions can deliver extraordinary profits. But still the crowd flocks together, buying what’s hot and selling what’s not.

Herding together feels so much safer – even through the very doors of the slaughterhouse!

“Gold rose 600% in the 1970s and then went down nearly every month for two years,” remarked Jim Rogers in an interview with Financial News earlier this week.

“Most people gave up – but then gold went up another 850%.”

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