Leaving the herd behind

There must be a thousand managed funds in various forms of packaging, but why are so many of their portfolios depressingly similar? Often the only distinguishing feature is the brand of the packaging. The answer is herding. That answer is expressed most profoundly by Bob Prechter in a paper for the Journal of Psychology and Financial Markets. "Human herding behaviour results from impulsive mental activity in individuals responding to signals from the behaviour of others," he wrote. "Impulsive thought originates in the basal ganglia and limbic system. In emotionally charged situations, t...