I came across an article talking about how a recent bison stampede got some folks worried about a super volcano eruption in Yellowstone National Park. The person filming the stampede suggested that since animals have certain instincts, the stampede could be a sign that the massive caldera (super volcano) may be about to erupt, which would be disastrous.
But according to a Yellowstone spokesman the bison were actually running into the park, meaning towards the super volcano.
There are valuable lessons for investors and advisors from this story.
- It’s not always a good idea to follow the herd mentality.
- Drawing catastrophic conclusions based on certain people running for the hills may cloud your thinking (think 2008/2009 stock market panic).
- You’d better know the end point for where the herd is heading (remember Sir John Templeton’s famous quote: “Buy when there’s blood in the streets.”)
The correct question may not be: What does the herd know? But rather, what does the person watching the herd know?
My best advice whether investing or visiting a National Park… Relax, take it all in, and don’t look for some story that isn’t really there.