posted December 13, 2011 06:16 AM
The Zoological Classification of Investors
[ Note: I wrote this satire for an investment portal in 2005 ]
Science has proven that humans share DNA with several species, hence there should be no surprises at the title.
Chimpanzees/Gorillas/Baboons and Humans have 98% similar DNA. The 2% mutation occurred when a Gorilla opened a banana ditch and gave 1 peel to 20 others, promising them 1 banana every day after a month if they gave him one banana each that day. Two weeks later, a whistle blowing baboon discovered that the ditch was empty and in the resulting punch up, brain damage in the tribe led to mutation. A majority of the mutants descendants became investors. The enterprising gorilla descendants became the founder of Market Operators, stock brokers, 'initial public offering' promoters and politicians. The whistle blowing baboon did not evolve too much. Its descendants became Journalists.
Now, apart from the primate component in our DNA protein complex, there is a personality component that derives from several animals.
This may have actually inspired the Chinese calendar. I always knew that the Year of the Horse or Year of the Rabbit meant that in those years, a Horse or Rabbit personality would lose his life savings in the stock market.
In fact, Karate evolved as a means to punish the stock broking cartels who cleaned up the Ming, Ping or Ching dynasties. The investors had to sell all their weapons and so were left with bare hands to kill the bears.
On to the zoology lesson.
There are 10 primary animal personalities.
1. The Bull Investor
The Bull Investor is very well known. The Press and Media never fail to praise the bull when it invests in an over valued stock, all the time convinced that it is undervalued.
The advantage of being a bull investor is that there is mostly a bigger bull who believes the other bulls bullsh1t and buys at even higher prices. This is also known as the “Greater Fool Theory”.
Logically, we can derive that all bulls are ultimately fools.
The last bull normally ends up in a double decker hamburger.
2. The Bear Investor
The Bear Investor is the master villain in our media. The evil Grizzly Bear brings down stocks because it thinks all stocks are over valued even if the stock earns ten times its par value every quarter.
Nobody understands the psychology of a bear investor. Some psychiatrists who belong to the mixture of Freudian, Jungian and Platonic school point out that inferiority complexes in childhood could lead to a Bear investor self identifying its low self esteem with all other objects of perceived value. I think Bears should attack such shrinks instead of shrinking the stock market valuations.
In any case Bears also end up being skinned when a herd of mad bulls attack them. Just being a carnivore will not a guarantee success in Wall Street.
3. The Fox
The proverbially wily Fox. It rarely loses. It will speak bull jargon and eat grass amongst bulls but sneak into the bear camp when the bigger and dumber bulls start leading the herd. Perhaps it gets tired of vegetarian meals after a point of time.
Later on, it will ditch the bears the moment it spots a large herd of even bigger and dumber bulls. Ultimately it gets to eat the bulls and wear bear skin suits.
You may find some foxes in the commodities, options and futures market. They get busted only in times of sudden disasters. Its safe to say that this rare species is the most successful of global investors. The World Investor Wildlife Fund however has the Fox Investors listed in the extremely rare category.
4. The Rooster
A Rooster investor cannot wait to day trade! It will rise early each day and rush to open three or four computer screens and scan the charts, crow about its discovery of stock price support and stock price resistance. It will bravely tell other chickens a precise entry and exit point without its feathers getting ruffled by the Major Index values.
99.9% of the time, the market will behave in the exact opposite way and as a result, the poultry industry is always stuck with the problem of over supply. Good for Chicken Kebab fans.....
5. The Lamb
The most common investor personality. Excellent expertise in being slaughtered day in and day out, week after week, quarter after quarter and year after year. They (We?) always manage to get in the wrong stock at the wrong time and get out of the right stock at the wrong time. Designed for destruction, you can never fail to identify them, especially in Internet message boards where they scream for help before their bankers drag them to the abattoirs. “Abattoir” is the Corporate Head Office of Butchers, for those who are rushing to get a dictionary.
Here is a typical Lamb Message in an Internet Stock Forum:
I bought 100 shares of Tobacco Chewing Software Solutions Inc at 25 dollars on recommendation from a leading analyst on XYZ Stock News Channel. The stock has since come down to 2 cents. Should I buy 100 more to average ?
Please tell me what to do! “
What can we answer! It is going to be slaughtered anyway so a Fox investor would ask the Lamb to average by buying 10,000 more, unloading his junk bought at one cent.
6. The Horse
The Horse Investors just want to run and run and run! They cannot stay with the same stock for more than 3 days, sometimes 3 hours. They are blessed with very poor mathematical skills and this helps them avoid any guilt feelings of booking losses. A cyclical pattern emerges in their lives wherein they lose all their trading money in 2 weeks and get back to their stable, laboring to earn enough for next years loss.
Unaware, they carry a lot of Fox and Snake Investors on their backs….
7. Which brings us to the Snake Investor
The deadliest possible investor. Even a Fox Investor may lose but a snake investor never loses because it has a forked tongue i.e two professions: That of an Analyst or Operator or Company Promoter as well as that of an investor. It will always claim that it does not have any vested interests in the stocks that are the focus of its research. [The Snake never lies to itself else it will bite its tail in disgust and commit suicide. All it will do is maintain two accounts, one for its wife or child to keep those stocks on which it manipulates consent in the general zoo of investors]
You will see snakes every day on a stock channel. They will call the right guest, another member of the brotherhood. The snake brothers would have picked up 100000 shares of say CatBurgling Gloves and Buttons Inc, talk about a textile boom which would boost the button market 10 times (Why? because one shirt needs 10 buttons at least, dummy) and after the show is over, dump their shares on a 20% upper circuit breaker. The company is likely to be de-listed next week due to bogus accounting but the Snakes have made a killing without even having to use their poisonous fangs. The forked tongue is sufficient…
Snake Investors also abound in the company of other animals. They will spur the horse to chase after the worst stock, lead lambs to the slaughter on the company ripe for the greatest fall and occasionally conduct special coaching camps for Foxes. Their mere look is enough to hypnotize a bull into action. Even Bears are not safe. Several Bears have been skinned when they short sold a stock in the morning just before a Snake releases news to lock it in the 20% upper circuit freeze.
The most dangerous place to suffer a Snake Investor is an internet message board where many Lambs can visit 24 hrs from across the planet to choose the knife for their slaughter.
Here is a sample conversation, brackets have my comments:
Snake_Investor: “Dear Friends, I have been told from the highest possible source (its maid or driver) that Aorta Knives and Razors Inc ( Company premises are actually used to make tons of cobwebs) is coming out with a 10:1 bonus issue i.e 10 shares bonus for every share held!!! Date of closure is only 30 days away, in their extraordinary general body meeting!!!
Buy! Buy! Buy! Stock will treble“
[10 days later]
Lamb_Investor “Dear Sir, Thanks for the info. The share has climbed to 275 from 30. I want to buy 10,000 shares with my life savings. Is there still sufficient chances of growth?
Snake_Investor: “Dear, Stock will reach 1000+. Buy! Buy! Buy!
(suddenly, the hypnotized Bull barges in)
Bull_Investor: “I am buying! Just buy! buy! buy! “
[2 days later]
Lamb_Investor: “ Bought 5000 shares as share is now 500. Thanks for the recommendation”
Next day the de-listing news will come with fines slapped by the monitoring agencies. The promoters have long fled to Switzerland. The stock has no buyers and eventually falls to 2 dollars
[20 days later, in the slaughterhouse]
Lamb_Investor: “I should have bought at 275 levels itself….”
Bull_Investor : “ If we escape the butcher, I have one more pick to help us recover.
Anti-Itching Software Solutions Inc , Target 3000 , BUY BUY …Bye Bye (Chop)….”
8. The Hog Investor
An easy classification. Hog Investors like to make pigs of themselves in Wall Street Street.
Instead of bringing home the bacon, they largely end up as sliced ham in a Bear restaurant.
The Bears do feel like a bit of a swine when they cut up the Hogs but its all in a days grunt for them. After all, these greedy Hogs should know when to stop buying a certain stock.
As you “Sow”, so you reap.
Heres a typical encounter, the poetic license is pure Hogwash:
Hog_Investor: “Oink! Oink! Grunt! Grunt!, I need 1000 shares more you runt! “
Snake_Broker: “Against my tendency do evil and shine,
I advise restraint and silently whine.”
Hog_Investor: “Oink! Oink! I need 1000 more, loafer!”
“Any delay and I change my broker!”
Snake_Broker: “This hurts me more than I thought it will,”
“Got you a 1000 more Piggy, Have your fill.”
[2 weeks and 20,000 shares later, the Hog loses his profits and is 90% in loss]
Hog_Investor: “Oink! Oink! How much credit do I have to start afresh?”
Shylock_Banker: “I don’t know but I will be knocking for my pound of flesh.”
(Actually it will need all 100 pounds of the Hog to pay for the losses, but you get the general
9. The Vulture Investor
Not a bad animal persona to have. Whenever a bubble bursts and millions of bulls, lambs, roosters , horses and hogs become mincemeat in the Snake /Bear owned slaughter houses, the vultures fly down to collect the scraps of stocks left behind after the carnage.
These are the times when Wall Street Street is so morose that even a graveyard starts resembling a Playboy centerfold in comparison. In some ways, Vultures can be more successful than Snakes and Foxes but have a habit of exiting the scene the moment a recovery takes place.
Afterwards they may mutate to other loser animal personas or stick to vulture hood patiently for a few months more.
10. The Elephant Investor
This one is a must have guest in meetings and high socirty parties! Typically a high net worth individual whose great grandfather was a Nawab of India, you will see them in race courses with elegant women young enough to be their grand daughters.
The names of their suits and ties will have 30-40 letters and sound like a combination of an Italian dish , a newly discovered galaxy and a latin name of an animal species.
These Elephants have the proverbial computer hard disk memory and will recall the board of directors of a company that went bankrupt 67 years ago. (I wont be surprised if the Elephant's daddy made a killing before the bankruptcy. Most Elephants have Snakes for advisors).
Elephants have the size advantage. Ok, I know that cliché wanted you to throw your chair into my head but I mean it. They get all the juicy IPOs first and a huge allotment thereby allowing them to get bigger. And whatever good stocks are left, the Elephants can use the Trunk advantage to hose it up. They really need to gobble up 1000s of shares of 100s of companies in a typical investment year. Market collapses and bubbles just don’t matter.
The Snake and the Fox use the infinite financial weight of the Elephant to ride the Horse for profits before arranging the slaughter of Lambs , Roosters, Bulls and Hogs through their favorite assassin, the Bear. The Vulture cleans up as usual.
This completes the top 10. You also have several other species behaviors in Investors but they are occasional. A 10 dollar profit will make some investors roar like a horny Lion. A Donkey persona will allow the investor to make an as$ of himself while stubbornly catching a falling share. A Shark Investor will loan his profits to Lambs and shear their wool before the Bear makes chop suey. So on and so forth.
The moral of this zoology lesson is to overcome your animal instincts and become a Human Investor. Learning from the mistakes of different personas and leveraging their strengths help improve your trade strategies to optimal levels over a lifetime. Maybe you will turn into an Elephant Investor with an FTV model by your side some day....
In a nutshell, develop the SPEED of a HORSE with the APPETITE OF a HOG in grabbing the shares a VULTURE PICKS by applying the CRAFTINESS of a FOX and then hold with the PATIENCE of an ELEPHANT and then sell before the SNAKE SLITHERS into the mass media to make or break the unfortunate investors.