6 replies to this topic

[dcengr]

The Proliferation and Growth of Guru Culture, by Dave G.

Gurus have always found fertile ground in the financial markets. The early 20th century brought us esoteria like Gann and his geometric lines combined with astrology. It also supposedly brought common sense gurus like Livermore with his simple rules and pivot points. Later on in the century, even more bizarre market seers arose, and Joe Granville comes to mind. One of my earliest memories of the market is reading about Granville promoting his "Books of Granville" dressed as the Biblical Moses. In fact, my first hands on exposure to the market was after I met a financial astrologer while fishing back in 1990. He claimed to have called the crash of 1987 and profited wildly by buying way out of the money OEX puts with his college fund. He became obsessed with repeating this feat and astrology in general. I remember his purchase of J. Paul Getty's astrologer Evangeline Adams library containing all types of esoteric tomes. Needless to say, to the best of my knowledge, this story does not have a good ending.

Recently, I have noticed a proliferation of gurus trolling the internet for memberships in various chat room type websites or seminars. They are generally traders of stock index products like the mini SP500, the mini Dow contract and the Russell 2000 mini product. They all have some type of indicator, method, or system that will enable their subscribers to easily extract profits by just following along. Some claim to use logic, others write in such an obscure manner that just about anything can be read into their words. I have divided the Neo Gurus into three main types:

1. The plain talking regular Joe: This type claims to have been just like you, prior to finding the holy grail, which due to his altruistic nature will share with you for a small fee.

2. The Esoteric Intellectual: This type of guru was never like his followers existing on a higher plane. However, he is generous and is gladly sharing his knowledge for a stipend of what you will earn by joining his flock.

3. The Mystic: This type, although related to #2, is very different. He claims supernatural chart reading ability and general future reading skills.

My contention is that this recent proliferation of market gurus is an indication of a near short term top. The last of the public is being drawn in to lubricate the machine for a rapid descent. The only unknown is when.

[dasein]

Has it really grown? havent gurus been around forever, and havent the hapless been sending them checks for that long too? klh

[dcengr]

Has it really grown? havent gurus been around forever, and havent the hapless been sending them checks for that long too?

klh

As much as Victor Neiderhoffer says his website is dedicated to "scientific" methods and he does not allow bearish opinions or untested hypothesis to be published...

I have to say that this article seems like it was made from one guy's opinion of whats out there, mostly pulled out of his @ss, with no evidence to back it up.



Seriously, I have no idea if the # of stock services have increased or not.

I do find it interesting, however, that there appears to be enough interest in stocks such that Bank of America is now offering their clients fee free stock trading. My assumption is that they are trying to exploit on the revival of stock trading by the masses by bringing in clients with this method.

So if its not the number of gurus that have grown recently, you can at least look at the B of A news that maybe things have gone a bit too far to one side of the boat.

[maineman]

Has it really grown? havent gurus been around forever, and havent the hapless been sending them checks for that long too?

klh

I really have no idea if there are more or less, but I do know that there is moth-to-flame aspect to this. As bull markets heat up it generates more talk, more ears prick up and more average Joes dream of riches. As markets correct or crash, there is a new breed of the chagrined who vow to never go near the markets again. And so it takes time for the memory of losses to fade and another new crop of dreamers to step up to the plate.



What might be "different" this time is the fact that in spite of new highs all around the wow factor seems to be absent.



Some possible outcomes:

1. The bull has SO MUCH farther to go until excitement heats up? (and thus my neighbor is just the tip of the new iceberg forming?)

2. The burnout from the 2000 bear is still so prevalent that what we are seeing is just a "correction" upwards in a still ongoing decline?

3. Neither? Comments?



mm

[dcengr]

The answer to that may lie in EWT and cycles. As EWT points out, the market has long spurts of bull market, spanning some tens of years, then flattens out into a large secular bear market where you have cyclical bull markets. Considering that 2000 may have been the peak of the secular bull market, which spanned since about 80ties to 2000, we could be in a secular bear market, with this recent bull market being a cyclical bull market. And as shown in 1973, a cyclical bull market CAN exceed prices of the secular bear market highs. But if we are truly in a secular bear market, then this recent leg is a wave 5 and ready to turn back into the secular bear market. If we are in a secular bear market, then we would expect, according to EWT, the length of the secular bear market to be about some fraction of the secular bull market (forgot the figure.. maybe 1/3 or so).. which may last about 10-15 years. Anyways, there's also the fact that once the stock market blew up, the housing market heated, and is now under danger of collapse, bringing back painful memories of the stock market blow up, which maybe preventing the masses from participating due to both blow ups. Not to mention that joe public lost their $ in the stock market, and is now losing their $ in the housing market, and don't have as much $ to play with anything especially when boomers are so close to retiring and can't afford to speculate for fear of living in the streets. And then there's the fact that the 2000 peak was truly a gigantic peak of proportions probably rarely seen in history of mankind, mostly because stocks became so widely spread throughout the world and involvement was down to every man via his retirement accounts (of which is fairly new to history of man). So comparing froth of 2000 peak to froth of 2006 peak... maybe trying to compare ditch digging to brain surgery. However, as I've posted about the investor sentiment survey, brokerage house surveys, etc. It would appear that there's no lack of bullishness via some measures. But there is plenty of evidence that at least in the actively investing public (via low risk, aaii, isee), this rise is full of doubt.

Edited by dcengr, 15 January 2007 - 09:20 PM.

[U.F.O.]

2. The burnout from the 2000 bear is still so prevalent that what we are seeing is just a "correction" upwards in a still ongoing decline?


The system of capitalism moves upward. Corrections can make it feel like the LT direction ought to be down, but it can't happen without something as dramatic as a geometric population decline. LLT bear markets can't exist without catastrophic stimulus. We don't have that, for now.

U.F.O.

[securelstmile]

One thing I never lose sight of.... I am a retailer, it is my own fear and almost complete inability to offer friends stock ideas that keeps me long. I was lambasted a few years ago at a ladies luncheon for suggesting that stocks were a better buy than real estate. One blonde yoga instructor was discussing her move out of stocks and into RE. Everyone was fascinated with her view. When I see this sentiment in these same people change I will know.