EVER seen the film This is England? British film. Young kid bullied at school befriended by skinheads and transformed from lone loser to uniformed gang member in a day. It is a powerful example of the positives and negatives of gangs.
Positives include: belonging to something; having friends; a set of rules to live by; no need to think for yourself. Negatives include: compromising your values in order to belong; being led; loss of independence of mind.
It is the core tenet of all gangs. People pulled together by choice or circumstance to adopt a collective behaviour pattern under a common banner. Our groups define us and the strongest moments of our life are when we challenge, change or exit them, defy our leaders, think for ourselves and set off in a new direction with our own rules.
The pages of literature are full of such struggles, from the playground to battlefield.
It's all about belonging, believing and behaving. As we go through life things settle, our patterns persist and it becomes easier to continue than to change, to accept than to fight, to not think any more than to think.
And so it is in the sharemarket.
The sharemarket is full of gangs:
The Warren Buffett gang.
A delusional band of groupies with unrealistic ideas that they can read a few quotes and emulate the smartest investor of our time.
The long-only, long-term
"it'll be all right in the end, mate" portfolio gang. Otherwise known as the "Eyes Wide Shut" gang. Membership requirements include having more money than you need.
The "doing the best you can with the best intentions to run your SMSF online" gang. Not much fun in that gang at the moment, but it's not your fault.
The "punting like a dervish online because you can't be bothered to go to the casino" gang. Any losses censored, any gains trumpeted. Membership requires you to be behind the eight ball of life.
The CFD gang. Main criterion for membership is a susceptibility to marketing and not caring that all you actually get for your cash is a ledger entry in someone else's bank account.
The "we don't care what it is as long as it's a derivative" gang. Best only to join for short periods when in possession
of a piece of reliable inside information. Long-term membership requires you to monitor positions for 48 hours a day and have guts of iron or bags of cash.
The Futures Trading gang.
As a private investor, you only stay a member until you work out it's all complete luck, it has the highest client attrition of any product and the only ones making any money in the long term are the brokers.
The "one stock forever" zombie gang. Highest depression and billionaire statistics of all gangs.
The "perpetual resources bull" gang, a subset of the Andrew Forrest gang. Requirements include an ability to say "stronger forever" without mixing it up with "stronger for longer", and to pump your fist even when the resources sector is officially in a bear market. Membership numbers are dropping off rapidly.
The "I'm pretending I know what I'm doing but really I'm guessing" gang. Largest membership of all gangs.
The Broker gang. More subsets than an LA penitentiary. At the moment it requires the ability to answer the question "How's it going?" with a smile and a bald-faced lie.
The Technical gang. Membership involves not bothering to do any real work other than spotting what everyone else is doing and doing it. Surprisingly disciplined gang, and that alone has ensured its continued existence and wealth. Most effective members also belong to the Fundamental gang.
The "I don't have any money in the market" gang. Members are either very smug or have lost everything and been banned by their spouses from screwing up their families future any more.
The "I sold in November last year" gang. Membership ¡ª zero.
The "market has bottomed" gang. New members joining every day.
How many do you belong to? Can you be bothered to change?