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A Tale of Two Stocks: Why Following the Crowd Rarely Pays
Hoxton Blog • A Tale of Two Stocks: Why Following the Crowd Rarely Pays
Jumping on the latest bandwagon is rarely a good idea.
Blindly following the crowd often leads to more risks than rewards, and this is apparent throughout history.
Just look at the so-called “Dotcom bubble” of the 1990s and early 2000s.
Investors poured money into internet-based startups, believing the internet would revolutionise everything overnight.
This caused stock prices of tech companies to skyrocket, even if the businesses had no real profits, weak business models or just an idea on paper.
But the bubble burst. Stock prices collapsed, the NASDAQ index (heavily tech-focused) fell almost 80% from its peak, and trillions of dollars in wealth vanished.
Some internet companies survived and adapted – such as Amazon, eBay and Google – but most failed.
It was a harsh lesson that crowd enthusiasm can’t replace solid business fundamentals.
A similar thing happened in the mid-2000s, when many hedge funds, pension funds and global investors all piled into mortgage-backed securities because “everyone else was making money”.
They trusted the crowd’s excitement and credit agencies’ AAA ratings, instead of doing their own due diligence.
Meanwhile, ordinary people rushed to buy houses because prices kept going up and “everyone was getting rich in real estate”.
Many bought more than they could afford, assuming they could always sell later at a higher price.
When those assumptions turned out not to be the case, the entire system unravelled. Housing markets crashed. Banks collapsed. And ordinary people lost jobs, homes and savings.
When Popular Falters
A more recent illustration of the cons of getting caught up in hype is the tale of Tesla and Oracle.
This year, Tesla has dominated conversations online. Social media and headlines have been buzzing with optimism about its future. But despite all the hype, Tesla’s stock is only up by about 5% year-to-date in 2025. And there were times last week when it fell to 8% down.
Meanwhile, cloud powerhouse Oracle has surged nearly 97.75% in the past year. Despite drawing far less media attention than Tesla, its stock soared 35.95% last week, after reporting explosive cloud demand – a move that set the stage for a historic rally.
CNBC reported that the company had notched a fresh all-time high, marking its best single day since 1992. Its market cap jumped by $244 billion, bringing it to $922 billion.
In its earnings release Tuesday after the bell, Oracle revealed $455 billion in remaining performance obligations, a jaw-dropping 359% increase year-over-year.
The gap in performance between these two companies is staggering, and it serves to illustrate that popularity doesn’t always equal profitability.
The Dangers of Following the Crowd
When a stock becomes the “flavour of the month”, investors often rush to buy in without considering the risks.
This kind of investing can lead to disappointment. Putting everything into one “hot” stock – like Tesla – can leave your portfolio vulnerable to swings and lower, or even below-market, returns.
Oracle’s incredible surge this year, fuelled by rising cloud computing sales and breakthroughs in artificial intelligence, reminds us that some of the best opportunities might be the quiet ones.
These winners don’t always get viral hype, but they deliver serious results when it counts.
Time in the Market Beats Timing the Market
Here’s where things get really interesting.
Many investors believe they can “time the market” – buy low, sell high and keep jumping in and out as trends come and go. But the reality is it’s incredibly tough to get right, even for professional investors.
Imagine you invest $10,000 and stay fully invested over 20 years. Your returns compound nicely. But if you miss just the 10 or 20 best days, your portfolio grows much less or even stagnates. Those few golden days often make up a lion’s share of total market gains.
Tesla’s muted performance this year and Oracle’s rally are perfect examples of why trying to catch every twist and turn is like trying to surf every wave perfectly – almost impossible and likely to lead to wiping out.
The Power of Patience
The smarter strategy is always to stay invested, stay diversified, and stay focused on what really matters: your long-term financial goals.
Diversification protects you from the shocks of owning a single stock. While Tesla struggles, Oracle shines, and other parts of your portfolio might be steady or rising elsewhere. Across your portfolio, these differences balance out risks and smooth returns.
Remember: Markets go up and down. Volatility is normal, even healthy. It’s the price of opportunity over time.
In today’s noisy investing world, where headlines change by the hour, the real winners are those who stay patient and disciplined. They tune out the buzz, avoid chasing every trend, and instead focus on fundamentals, diversification, and the long game.
The Tesla-versus-Oracle story makes this clear: hype doesn’t always translate into success, and often it’s the quiet achievers that pull ahead.
So, the next time you hear about a “must-have” stock, pause and ask yourself — are you following the crowd, or following a plan?
At Hoxton Wealth, we place a strong emphasis on diversification.
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