After reading all
the posters on internet chat boards and listening to all the talking heads
and suffered the agony of defeat and the glory of instant wealth (no matter
how fleeting) I've come up with a list of investor types...or rather stages
some of us may have gone through during various times in our investing
career. This list is especially tailored in light of the current phase of
market history...massive loses and uncertainty over the future.
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Rabid Bull:
This individual is the poster child for the Louis Rukeyser WSW show. No
matter how gloomy or how obvious the end of the trend is, this investor
stays bullish. He says things like, "stay invested in America...over the
long haul, stocks always go up...don't be a nervous nellie and panic at the
bottom...market timing is a fools game...you betcha." But behind the
optimism is a severe lack of optical fiber since it appears that this
investor's memory was formed over the last 18 years (inclusive). The
horrible 12 years of nothingness from the mid sixties into the seventies is
lost on this type. Dipping is a favorite pass time. Denial sets in when
stocks begin to fall. Fundamental analysis in stock picking is used at first
but is often ignored when it is important to justify a position. EBTIDA or
EBITDA or EBDTIA or whatever was used when things got rough.
Love Bull:
This one falls in love with a stock because it made him so much money at one
point or has provided some other sensual pleasure in the past. Every
negative comment by anyone is labeled as part of a secret FUD (fear,
uncertainty, doubt) campaign by the opposition or evil shorts to drive the
price down. Every positive development is couched as the next big thing.
Despite reasonable warning signs, this investor stays with a love stock all
the way to the bottom. Cult stocks like Apple, Qualcomm, and Yahoo are homes
for folks like this. There were some in the great Globalstar delusion, but
they are only holding wallpaper at the moment...baring the second coming.
They are oftent the ones saying, "the stock is too cheap to sell now."
Meanwhile, the stock loses another 50%. One the way up, this investor
becomes giddy with joy.
Crisis Ostrich:
After an investor loses a considerable amount of money in his favorite
stocks, he decides to just ignore the whole market and goes fishing.
Relative of the Rabid Bull, this investor takes denial to new heights. Since
he believes all stocks eventually go back up, he resolves not to look at his
portfolio for a mentally agreed upon time KNOWING things will be better.
This investor is probably the least experienced of the bunch. This can be a
metamorphic step for the Love Bull. Supporting such views are some of the
talking heads and the Motley Fool dogma of buy and hold. This investor is
obviously a believer of the long term buy and hold faith.
Worm Eater:
This investor is in complete depression. Having lost a significant amount of
money, he is often seen eating worms in his garden. Comments from loved ones
to help him include: "we still have each other...we have so much to be
grateful for...money can't buy happiness...you really never had the money in
the first place...its just a paper loss." Unfortunately none of these
support lines help. Depression is coupled with a deep sense of personal
failure. This is a very dangerous situation because this investor is more
prone to emotional investment decsions to "get back" what he lost. Using
margin, making big bets on single stocks, or trying investment strategies
that he is not familiar with are possible actions. The safest thing for this
investor to do is get out and stick with CD's.
Congenital Bear:
This investor salivates every time the market goes down. He prays for global
disaster and thinks things like gold and guns are good alternatives to
stocks. Every time the market goes up he snorts and believes only fools are
driving up the prices. Shorting is his favorite investment strategy and
wouldn't consider buying stocks until the Nasdaq reaches 600. Abelson in
Barron's is the poster boy for this group. The daily bear report from David
Tice's Prudent Bear Fund website is a daily prayer. Always ignored until the
market's tank, this guy has been in denial over the past 18 years and has
missed the greatest bull market run in history...a point of pride because he
KNOWS the great depression is coming and all the bulls will get wiped out.
Mr. Spock:
This investor loves nothing, believes very little he hears and thinks most
investors are idiots...even himself. He knows how to read a balance sheet
and dreams of cash flow and worries about company debt levels. Once he
identifies a stock to purchase, after weeks of study, he buys a small amount
setting an exit strategy if things don't go his way OR do go his way. This
is not the type of person you would want to go on a date with. The moment
you say something stupid, he'll dump you and drive home. Rather than
following the long term buy and hold religion, he believes in using stocks
and then dumping them when everyone else is in love. This kind of behavior
is ridiculed by the average retail investor who calls this type of person a
gambler...NOT an investor...the ultimate insult. Rumor has it that many
triage nurses have adopted this particular investment (gambling) strategy.
This investor (gambler) uses a combination of technical analysis and
fundamental analysis to make investment (gambling) decisions.
Who are you?
Does anyone know the the Guinness workers will go off strike? |
