The latest Oliver’s Insights, written by Shane Oliver (AMP’s head of Investment Strategy and Chief Economist), discusses why investors need to be wary of just following the crowds.

Key points include:

  • For periods of time in may pay to back the crowd in investing, e.g. When a bull or bear market is developing.
  • But at extremes the crowd is invariably wrong. Eventually everyone who wants to buy will have done so and the only way is down (or vice versa during crowd panics).
  • Investors are best off taking a contrarian approach – buying into assets that are unloved by the crowd and undervalued, and selling assets that have become overloved by the crowd and overvalued.

For the complete article click here: 20140214-oi-why-investors-need-to-be-wary-of-crowds

As these articles often raise questions, please contact your adviser on 03 5559 7111 to discuss any concerns.