Nancy Tengler, Special to USA TODAY
The time to sell is not when stocks are down. Yet the principle is so much easier to embrace during rising markets than in the midst of chaotic selling, which causes our flight instinct to kick in.
Resist the urge. Money is made at turning points and the crowd is rarely right at critical moments. Why? Because 50% to 90% of daily volume is driven by the trading algorithms, not by human investors with long-term time horizons.
Consider lemmings, small rodents who migrate in large groups when their population density becomes excessive. The lemming’s instinct is to run with the crowd, even at its own peril — even to its death.
Lemmings are often compared to investors chasing what just worked. Think analysts upgrading Apple at $320 (lemming) compared with selling Apple in a regular and disciplined fashion as it continued to hit new highs (not lemming).