Herding In Investing Significantly Impairs An Investor’s Ability To Generate Market Beating Returns

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During his recent interview with Tobias, Mark Jones of Pragmatic Capital provided some great insights into why ‘herding’ in investing significantly impairs an investor’s ability to generate market-beating returns, saying:

Mark Jones: I think there’s a lot of herding in investing and I think that that significantly impairs an investor’s ability to generate market-beating returns. It’s difficult to beat the market if you’re investing with the market. I think that the underlying driver of that is this psychology whereas, I think most investors focus on what they see as valuable and what they see as a valuation metric versus well, the market is your customer if you will. One period, you’re their customer, the next period, it’s your customer. You have to know your customer.

I think that instead of focusing on if you like this business or don’t like the business, let’s just focus on the numbers and say, “Well, what is the market expecting and what will the market pay if this happens? If that happens?” Kind of base it on that. I’m looking forward to kind of starting a new narrative on investing and helping people to find their unique approach to really shine as investors.

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