How Financial Trends Are Misleading You—And What You Can Do About It
Never confuse popularity for quality
“Those who follow the crowd usually get lost in it.”
-Anonymous
The bandwagon effect is just what it sounds like; it's when people do something because they see lots of others doing it too.
I first noticed this with sports fans.
I've been a hardcore Toronto Raptors fan since I was 11, right from when Vince Carter joined the team. Being a Raptors fan was mostly a bummer for a long time. The seasons usually ended with us either way down in the rankings or getting knocked out early in the playoffs—often in the most heartbreaking or humiliating possible fashion.
But everything changed when the Raptors won the championship in 2019. It was like suddenly everyone in Canada was a huge Raptors fan.
You could see outdoor viewing parties for their playoff games in almost every town. We longtime fans started calling these new people "bandwagon fans" because they only started liking the Raptors when they were winning.
The bandwagon effect means the more popular something is, the more people want to jump on board. This is okay when it's about sports, but when it comes to money, making choices just because everyone else does can end really badly.