The Spotted Lanternfly
According to Kate Lust, CFP® 30 bugs crawling on top of each other on the corner of our building is the ‘stuff nightmares are made of’. Wilfred Trotter coined it something else in the early 1900’s. He called it herd behavior. We’ve been talking about ‘herd behavior’ in the animal kingdom, in behavioral psychology, and in the investment business ever since.
Herd behavior is the running of gazelles on the African savanna when they spot a lion crouched and ready for a chase. It’s also the term used to describe Swifties on the ticketmaster website…the conduct of different individuals in a group acting without using an individual thought process.
Herd behavior isn’t bad. It’s what keeps most of those gazelles alive and also what prompts you to leave a building that might be on fire even though you didn’t smell smoke or see the blaze. It isn’t bad, but it can certainly be dangerous.
Native Americans used herd behavior to their advantage in one of the most ingenious hunting techniques I’ve ever come across. A few folks would dress up as buffalo and then as their friends rode in on horseback or ran out from hiding, the decoys would lead the stampede to a nearby cliff where all of the buffalo would jump to their demise. No arrows needed and a feast for days. You can read more about this fascinating period before the local butcher showed up on your corner here.
Herd behavior can be dangerous for humans too, especially in regards to their finances. We saw it with tulips in the 1600’s, we’ve seen it during the dotcom bubble four hundred years later, and we’ve seen it recently with meme stocks and NFT’s. Remember NFT’s? I hope the spotted lantern fly takes the same path as the valuations of NFT’s. Here today, gone tomorrow.
We are wary of herd behavior and that’s why we believe so much in planning. An individual, written, specific financial plan is the antithesis of group think. By definition it is an individual thought process. It keeps you from running off the cliff with the other buffalo. Let herd behavior influence your life in the ways that it helps you…saving you from a burning building, trying a new craft beer, or getting some exercise because everyone is playing pickleball. Steer clear of the herd behavior ‘that is the stuff nightmares are made of’.