Idenix Pharmaceuticals (IDIX)

[go seek]

Have you herd this one?

Research has looked extensively into the idea of herding behavior. Out in nature, the advantage of the herd, and in particular being in the middle of the pack, is obvious: Mid-herd, you are much safer from the hungry lion than on the outskirts or, worse, out by your lonesome. The idea translates pretty well to the stock market, where investors typically feel safest moving in the same direction as the rest of the market.

As the Internet bubble showed us, though, when the herd gets frothy, it can sometimes end up going in the wrong direction -- like, say, off a cliff. From that perspective, then, it's good to always keep a reality check on what the rest of the crowd is doing and make sure that things aren't getting out of control.

http://www.fool.com/news/commentary/2006/commentary06121401.htm?source=eptyholnk303100&logvisit=....