Why The Crowd Follows Trends — And Why Investors Go Against Them
Trends are a common way for people to invest and usually ends with them losing money. Most people believe successful investing is about spotting the next big thing. In reality, it’s more often about resisting the instinct to follow the crowd.
I was reminded of this recently by something trivial on the surface, a social media trend. Bright, colourful AI caricatures appeared everywhere almost overnight. Fun, eye-catching, unmistakably “of the moment.”
When I tried it, mine came out a little differently. Black and white with the odd dash of gold. ChatGPT definitely understands my branding and colours.
However, looking at this from a serious point of view, tt was a small reminder of a much bigger pattern. One that plays out repeatedly in markets, business, and investing.
Key Takeaways
- Crowds are drawn to what’s popular and visible
- Investors pay attention to timing, structure, and cycles
- Price drops often trigger emotional selling — not strategic thinking
- Accumulation during pullbacks can accelerate long-term growth
- Patience and consistency compound more reliably than trends
Table of Contents
Trends, Comfort, and Crowd Psychology
Humans are wired to seek safety in numbers. When something is everywhere, such as a product, an opinion, an investment, it feels safer. If everyone else is doing it, it must be right… or so the thinking goes.
This is why:
- trends spread quickly
- bubbles form
- panic selling happens just as opportunities appear
Visibility creates comfort. But comfort is rarely where value is created.
How Investors Think Differently
Investors tend to pause where others rush. Instead of asking:
- What’s popular right now?
They ask:
- Where are we in the cycle?
- What happens next, not just now?
- Is this reaction emotional or structural?
This mindset doesn’t come from contrarianism for its own sake. It comes from understanding that markets move in cycles, not straight lines.
Warren Buffett once famously said – Be Fearful When Others Are Greedy and Be Greedy When Others Are Fearful. In other words, don’t follow the trends.
Why Price Drops Feel Worse Than They Are
When prices fall, most people instinctively think: “I’m losing money.” But in many cases, nothing fundamental has changed. What has changed is sentiment.
Short-term price drops are often caused by:
- profit-taking
- fear
- headlines
- uncertainty
Not by a collapse in long-term value. For investors who understand cycles, these moments aren’t signals to exit, they’re opportunities to reassess positioning.
Gold and Silver: A Practical Example
Gold and silver are excellent examples of this behaviour. When prices rise steadily, interest increases.
When prices spike, excitement follows. When prices pull back, many people sell often at the worst possible time.
Yet price pullbacks in precious metals frequently offer:
- better entry points
- lower average purchase prices
- increased long-term upside
Selling into weakness locks in emotion. Accumulating into weakness builds position.
Accumulation, PCA, and Positioning for Growth
One of the simplest accumulation strategies is Price Cost Averaging (PCA). Instead of trying to time the market perfectly:
- you buy consistently
- you accumulate more units when prices fall
- your average cost reduces over time
When prices eventually rise again:
- growth accelerates faster
- recoveries feel smoother
- decisions are calmer
This approach reframes downturns. Instead of “Prices are falling — I should get out.” The question becomes, “Can I accumulate more at a better price?” That shift in thinking is often the difference between reacting and investing.
Systems Over Sentiment
Trends are not the enemy. They are signals. But lasting results rarely come from chasing what’s loud, popular, or emotional. They come from:
- understanding cycles
- trusting systems
- accumulating patiently
- thinking in years, not weeks
Whether in branding, business, or investing, the crowd usually arrives late. Investors position quietly before the excitement, or after the fear.
And over time, that discipline compounds.
Frequently Asked Question
Why do investors often act differently from the crowd?
Because investors focus on cycles rather than emotions. While crowds react to headlines and short-term price movements, investors look at long-term fundamentals, positioning, and where an asset sits within a broader market cycle.
Is buying when prices fall risky?
It depends on what you are buying and why. Accumulating assets with long-term value during price pullbacks can reduce your average purchase price. Risk increases when decisions are driven by fear rather than strategy.
What is Price Cost Averaging (PCA)?
Price Cost Averaging is an investment approach where you invest a fixed amount regularly, regardless of price. This naturally results in buying more units when prices are lower and fewer when prices are higher, smoothing volatility over time.
Why do people tend to sell during market drops?
Price drops trigger emotional responses such as fear and loss aversion. Many people interpret falling prices as failure rather than opportunity, even when underlying fundamentals remain unchanged.
How do gold and silver fit into a long-term strategy?
Gold and silver are often used as defensive or wealth-preservation assets. They tend to perform differently from traditional markets and can offer stability, particularly during periods of economic uncertainty or currency devaluation.
Should I stop following trends altogether?
No. Trends can provide useful signals. The key is not to rely on them for decision-making. Long-term strategies are built on systems, not short-term popularity.
How do I know if a price drop is an opportunity or a warning sign?
By assessing fundamentals, market structure, and broader economic conditions. A strategic approach considers whether the asset still serves its purpose within your overall plan rather than reacting to price alone.
Is contrarian investing about being different on purpose?
No. Contrarian investing is about timing and valuation, not disagreement for its own sake. Investors often appear contrarian simply because they act at different points in the cycle.
How does this thinking apply outside of investing?
The same principles apply to business and branding. Sustainable results usually come from consistency, structure, and long-term positioning rather than chasing what is currently loud or popular.
Learn More
If you want to learn how to apply cycle-based thinking across:
- investing
- income generation
- asset accumulation
and build systems that work in both calm and volatile markets, explore Zero to Millionaire — where we focus on long-term positioning, not short-term noise.
Karen Newton Ecosystem
Glossary
A definition of words and phrases used on this blog are available in the Glossary
Karen Newton is a Business and Wealth Strategist, 3x International Bestselling Author, and founder of Karen Newton International. She combines practical experience with AI-Powered Entrepreneurship to help smart entrepreneurs build online income, invest strategically, and create long-term wealth through business growth, investments and joint ventures.
