Sheep

AAA

DEFINITION of 'Sheep'

An investor who lacks a focused trading strategy and trades on emotion and the suggestions of others, including friends, family and financial gurus. This type of investor often makes rash investments without first determining whether these decisions are financially viable. The behavior of sheep contrasts with that of bulls and bears, who have focused views about the market.

INVESTOPEDIA EXPLAINS 'Sheep'

Like a sheep, this type of investor is a follower, relying on a shepherd for guidance. These shepherds can come in the form of financial pundits or the latest trend or market story.

Sheep-like investors are often the last to get in on a major market move, such as the tech boom of the late '90s, because they base their investments on what is being talked about the most. Many experts believe that sheep-like investors are the most likely to sustain investment losses because they have no clear investment strategy.

RELATED TERMS
  1. Ostrich

    A colloquial term that refers to the tendency of certain investors ...
  2. Herd Instinct

    A mentality characterized by a lack of individual decision-making ...
  3. Lemming

    The act of an investor following the crowd into an investment, ...
  4. Bull

    An investor who thinks the market, a specific security or an ...
  5. Investment Strategy

    An investor's plan of attack to guide their investment decisions ...
  6. Pig

    An investor who is often seen as greedy, having forgotten his ...
Related Articles
  1. Investors: Rely On Your Gut
    Options & Futures

    Investors: Rely On Your Gut

  2. Digging Deeper Into Bull And Bear Markets
    Active Trading Fundamentals

    Digging Deeper Into Bull And Bear Markets

  3. Surviving Bear Country
    Active Trading Fundamentals

    Surviving Bear Country

  4. The Wall Street Animal Farm: Getting ...
    Insurance

    The Wall Street Animal Farm: Getting ...

comments powered by Disqus
Hot Definitions
  1. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  2. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  3. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  4. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  5. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  6. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
Trading Center