Charles Mackay wrote something almost 200 years ago that feels as if it was written yesterday.

“Men, it has been said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.”

Read that again.

The first part is easy to understand.

People get carried away together.

A bull market arrives.

Everyone starts talking about stocks…Prices rise…Confidence rises even faster.

Soon, investing no longer feels like investing.

It feels like free money.

The fascinating part is the second half.

“They only recover their senses slowly, and one by one.”

Think about every major bubble in history.

The dot-com boom…the housing bubble…cryptocurrencies…meme stocks.

Every cycle begins with excitement…then comes euphoria…eventually, reality arrives.

However, something curious happens.

People don’t suddenly become rational together.

One investor quietly walks away.

Another admits they made a mistake.

Someone else slowly changes their strategy.

There is no crowd when wisdom returns…only individuals.

That is perhaps the greatest lesson in investing.

The crowd is excellent at creating bubbles.
It is terrible at creating wisdom.

Wisdom is almost always a lonely journey.

It requires the courage to buy when everyone else is fearful.

The courage to be cautious when everyone else is euphoric.

The courage to say, “I don’t know” and perhaps most importantly, the courage to think independently.

The market will always tempt you to follow the herd because following the crowd feels safe…until it isn’t.

The irony is that your greatest investment returns will rarely come from thinking like everyone else.

They will come from having the patience to think for yourself because markets move in herds, but wealth is usually built…one thoughtful decision at a time.