Sean Pyles

A lot like the NFTs is all happening at the same time.

That's right.

So in that case, a bunch of industry investors shorted the video game store's stock.

Then a bunch of amateur investors on Reddit got wind of what happened and began purchasing shares, which did what?

It drove up the price and resulted in what's called a short squeeze, leading the industry investors to scramble to minimize their losses.

And some people made a lot of money on that.

Many more people lost money.

Yeah, people can get really swept up in herd mentality during moments of stock market volatility or big trends like we saw with the GameStop event.

And if they see people panicking and selling their investments, other folks might want to jump on the bandwagon and do the same.

And this can be a big money loser for a lot of people.

They sell their stocks one day when the market is down, but it might be back up to another record high the next day.

And guess what?

Now you've sold your investments at a loss and you're going to have to pay more to get back into the market, all because you were following what other people were doing.

Sounds exhausting and does not sound like my investing strategy.

Yep.

All right, Sean.

So how can people not succumb to herd mentality and then hold on to their coins instead, or in this case, investments?

I would say folks should focus on their financial and investment goals and their time horizon.

Realize that herd mentality also isn't limited to investing.

I'd argue that the surge in interest in things like online sports betting and prediction markets is symptomatic of herd mentality.