Bandwagoners are among us. We’ve heard the term used in sports all the time to describe fanbases that suddenly appeared out of nowhere. Commonly, fanbases of certain sports teams will be ridiculed for being bandwagons (and deservedly so), however the concept of the bandwagon itself does not typically get scrutinized. However, the bandwagon phenomena has seemingly become more prevalent in society than we may have noticed (or better yet, pretended not to have noticed). Not only are bandwagons a nuisance (looking at you, lifelong Warrior fans), they are actually more perilous than they appear at first glance.
While it is admittedly fun to make fun of the lifelong since 2020 Tampa Bay Buccaneers fanbase for its here-today, gone-tomorrow support (or Golden State, or Clemson, and so on)., the phenomena has seeped into the world of investing as well. Gone are the days where investors researched and considered their choices carefully prior to buying, we are now amidst an NFT (non-fungible token) craze in which otherwise non-participants have thrown themselves onto the bandwagon despite not understanding the asset class. Without understanding their risk tolerance, such investors (if you can even call them that) are much more prone to panic-selling at a loss, after the euphoria of their bandwagon buys. Such bandwagon embark-then-disembark behavior undoubtedly plays a part in the price instability of NFT’s, and the same invariably applies for cryptocurrencies as well. The true winners (assuming no illegal manipulation, but that’s a topic for maybe another article) will very likely be the buy-and-hold investors (the non-bandwagoners). Put another way, bandwagoning in a very real way destabilizes our markets.
We occasionally see the same behavior spill over into our election cycles. Candidate A will have a few catchy soundbites, which will then usually lead to attracting a few die-hards who make a lot of white noise on social networking sites. This results in the creation of a bandwagon, where the relatively uninformed will jump on. I don’t think I need to cover in detail why voting for a candidate (of either party, I’m not here to pick sides) without understanding their platform is a bad idea. Again, in a very real way, the bandwagon tendency is ruining our society.
What is seldom discussed with respect to bandwagons is how the bandwagon ride ends. The bandwagon ride, as we’ve all seen in the aforementioned examples, appears from out of nowhere and usually galivants around full of bombastic arrogance. However, when the Warriors/Bucs/Clemson Tigers fail to win a ring yet again this year, when Bitcoin has yet another 30% dip in price, when Candidate A loses the election, the mass bandwagon exit is rarely (if ever) as loud as it’s creation. The mass-disembarking is usually silent. Further, the bandwagon-passengers usually backpedal on their previously-held beliefs, often claiming that they weren’t that interested in [insert hysteria here] to begin with. The disloyalty is apparent. Don’t believe me? Ask how many nation-wide Miami Heat or Cleveland Cavalier fans are still left.
Since we’ve explored how bandwagons are destabilizing and dangerous, simply getting off the bandwagon that you are riding is not enough. While I applaud the shredding of Steph Curry jerseys, selling Ethereum in favor of buying S&P 500 shares, and foregoing juice cleanses in favor of drinking more water, more must be done. One should apply the filter of skepticism and become adept at identifying temporary fad-followings (looking at you, Bucs fans) and encourage others to jump off their bandwagons. For once society has achieved the mass exit of bandwagons, we will find ourselves in a more stable, safer and least of all, less annoying world to live in.
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