Sheep Investors: Characteristics, Risks, and Transformation


Sheep investors are individuals who lack discipline, blindly following the advice of others in the world of finance. This comprehensive guide explores the key characteristics, behavior, potential risks, and why they often fall victim to market trends. Learn how to identify, avoid, or transform into a more informed and self-reliant investor.

What is sheep?

In the vast landscape of finance, the term “sheep” is used to describe investors who lack discipline and have an unfocused trading strategy. They often base their decisions on the suggestions of others, whether friends, family, or purported financial gurus. Instead of conducting independent research and due diligence, they follow the crowd, chasing trends and making uninformed trades.

Key characteristics of sheep investors

Blindly follow the crowd

Sheep investors are known for simply following the crowd. They make investment decisions based on what is currently popular or widely discussed. Rather than thinking independently, they rely on the herd mentality.

Lack of knowledge

Many sheep investors lack knowledge about investment tactics and principles or simply do not invest the time to educate themselves properly. This lack of understanding leads them to depend on the guidance or advice of others, often without a second thought.

Dependence on shepherds

Sheep investors often depend on “shepherds” for guidance. These shepherds can take the form of financial pundits, the latest market trends, or even friends and family members. Unfortunately, these sources may not always provide reliable investment advice.

Sheep behavior vs. bulls and bears

Understanding sheep behavior is more apparent when it is compared to that of bulls and bears, two other significant groups in the financial world.


Bulls are investors who maintain a positive outlook on the market. They are generally optimistic and confident about the direction of their investments. They believe that the market will continue to rise.


Bears, on the other hand, are investors who have a pessimistic view of the market. They believe that market conditions will worsen, and they often make investment decisions based on this belief. They tend to be more cautious.


Sheep investors, as mentioned earlier, are followers who depend on the guidance of others. Their decisions are often not based on their analysis but rather on external advice.


Here is a list of the benefits and drawbacks of sheep investors in the financial world.

  • Potential for profit when following the right herd.
  • Sheep investors may discover reliable financial sources and mentors.
  • Risk of substantial financial losses, especially in a bear market.
  • Lack of personal financial growth and development due to dependence on external advice.

Sheep behavior and major market moves

Sheep investors tend to be the last to join major market movements. For example, during the late ’90s tech boom that eventually led to the tech bubble, they entered the market when it was already too late. Their investment decisions are often based on what is being talked about the most rather than thorough research or analysis. Research has shown that sheep-like investors are more likely to experience investment losses because they lack a clear investment strategy.

Sheep characteristics and potential risks

Vulnerability to market swings

Sheep investors are particularly vulnerable to making poor decisions during a strong bull market atmosphere. In these optimistic periods, they may become overconfident, especially if they get caught up in the excitement of positive momentum. This overconfidence can lead them to make risky moves.

Targeted by investment services

During bullish market phases, investment-related services and products often target sheep investors. These services employ persuasive sales tactics to promote materials, tools, and services. This can cause sheep to rush into investments without proper consideration, potentially leading to further financial losses.

The profitability of sheep for investment advisors

Investment advisors and financial “gurus” often find sheep investors to be profitable targets. Their susceptibility to convincing sales pitches and persuasive tactics makes them an ideal audience for those seeking to sell investment advice and financial products.

Frequently asked questions

Can sheep investors ever become successful in the market?

Yes, sheep investors can improve their financial outcomes by becoming more informed and self-reliant in their investment decisions. They should focus on education and developing a clear strategy to make better-informed choices.

How can I avoid becoming a sheep investor?

To avoid becoming a sheep investor, it’s essential to educate yourself about investment principles and conduct thorough research. Be cautious when receiving investment advice, and verify the credibility of your information sources. Developing a clear investment strategy can also help you avoid following the crowd blindly.

Key takeaways

  • Sheep investors often blindly follow the crowd and lack independent decision-making.
  • They may lack knowledge and depend on external advice, making them susceptible to market trends.
  • Comparing sheep behavior to bulls and bears highlights their follower mentality.
  • Vulnerability to market swings and targeting by investment services are key risks for sheep investors.
  • Investment advisors find sheep investors attractive for their susceptibility to persuasive tactics.
View Article Sources
  1. Sheep, goat financial management workshop slated for June 1 – The Pennsylvania State University
  2. Standardized Performance Analysis for Sheep Producers – Colorado State University
  3. USDA Announces National Sheep Industry Improvement Center Board of Directors Appointments – Agricultural Marketing Service
  4. What Companies are in the Basic Industries Field? – SuperMoney