Herd effect makes LED selection difficult

In recent years, the phenomenon of LED investment has become increasingly apparent. No matter whether it is a listed company or a private enterprise or a foreign company, it seems that "LED" is equivalent to "making a lot of money." Even clothing, panels, real estate, and mobile phones are used. They all come in and want to invest in the LED industry. This "herd" effect, I am afraid that will make the LED "investment" into an "overdraft", and ultimately allow investors to "nothing to accept."

The fear of flock effects led to the LED investment becoming overwhelming. Herding refers to the fact that people are often affected by the majority of people, and following the public's thinking or behavior is also known as the "herd effect." People will follow the consensus of the public and they will not think about the significance of the incident. Herding is the basis for resorting to the masses' fallacies. The “herd effect” means that people in metaphor have a herd mentality, and herd mentality can easily lead to blind obedience, and blind obedience often leads to scams or failure.

Undoubtedly, the huge market potential of the LED industry today shows tremendous business opportunities. Because LED light source has the advantages of energy saving, environmental protection, and digital design, it can be widely used in backlight, advertising display, automotive lighting, traffic information identification, general lighting and other fields, and its replacement of traditional light sources is accelerating. In particular, the country began to phase out incandescent lamps this month, which undoubtedly freed up more space for energy-saving lamps and LED lighting.

However, the broad market prospects are the main incentive for LED investment boom. LED investors have the phenomenon of learning and imitating in the transaction process. They are “like to learn” and blindly imitate others to form the so-called “herd mentality”. This is also a common phenomenon in the market behavior of some companies in management. Due to the insufficient knowledge and lack of understanding of the LED industry, it is difficult for LED investors to make reasonable expectations about the future uncertainty of the market, often through the observation of the behavior of other companies and individuals in the industry. In the constant transmission, many people's information will be roughly the same and reinforce each other, resulting in herd behavior. The “herd effect” of LED investment is a non-linear mechanism of collective irrational behavior caused by individual rational behavior.

The flock is a very disorganized organization. It is usually blindly left and right, but as soon as there is a head of sheep moving up, other sheep will wander without hesitation, completely ignoring the possibility that there may be wolves or not far There is better grass. Obviously, in recent years, the government has used subsidy methods to attract corporate investment, which in turn has promoted the pattern of local GDP growth, and it is expected to stimulate domestic LED industry investment to flourish. Even the government wants to support and invest in the LED industry. Will other investors continue to “sit down”?

As far as the Pearl River Delta region is concerned, Guangzhou Guanggu, Jiuzhou Optics Valley, and Jiangmen Guangbohui are projects built under the support or investment of the government. “Herding” usually occurs in a highly competitive industry, and there is a leader (leader) in this industry that takes the main attention. Then the entire flock will continue to copy the actions of this leader. Where do the leaders go to "graze" and where other goats go?

There are two types of investment in the LED industry. The first is to scramble concepts. Such people do not understand the industry at all and only know the three English characters of LED; the second is directed at the government's financial subsidies and even at low prices.

For individuals, it is also difficult to avoid being eaten or eliminated by following behind others. The most important thing is that individuals who want to enter the LED industry must have their own ideas, and taking the unusual path is the shortest way to stand out. Whether it is joining an organization or self-employment, the ability to maintain a sense of innovation and independent thinking is crucial.

The “flock effect” tells us that many times, it is not what proverbs say—“The eyes of the people are bright.” The general public in the market tend to lose basic judgment. People like to join in the crowds and people. Therefore, collecting information and judiciously judging it is the best way for people to reduce LED investment blindly and use more of their own rationality. Aladdin Lighting News reporter believes that the rational use and guidance of herding behavior can create regional brands, and the formation of scale effects, in order to obtain better results than the disadvantages. With more and more market entrants, LED industry competition with low threshold will become fierce, LED investors need to pay attention to the industry bubble, beware of over-investment of LED funds, spiritual "overdraft."