Mutiny amongst bearish cult followers

I am watching with great amusement an outbreak of mutiny amongst bearish cult followers of a guru. Going by very sharp exchange of words in comments section, it looks like a full fledged war is soon about to breakout.

There is a belated recognition of having missed out on some money making opportunities. The hard core cultist are out in full force defending the cult. To me it looks like a severe bout of post purchase dissonance.

By the time cult followers recognise they are following the wrong guru, it is always too late.

May be it signals something?


walter said...

do you believe in the cult of the bull? and why? i sure do...

Pradeep Bonde said...

Because I have studied the history of markets. Probably from the very first day of the stock markets existence, there have been bears predicting doom and gloom. They have been wrong spectacularly for hundreds of years. Every statistical study shows that.
Markets may have periodic corrections, but rarely crash. But the bears want to convince you it is going to be everyday occurrence.

Plus I am betting against majority. The top 2-3 blogs attract thousands of followers. They are the most bearish on the market and use every trick in the book to distort data to fit their hypothesis. They give absolutely ridiculous advice, which is not supported by statistics. They childishly attack anyone who challenges their logic. Constantly dream up weird conspiracy theories. They are the darling of mass media. Now if that is analysis donkeys would win horse derbies.

walter said...

interesting, because i feel that there is a permabull bias in the market. also, i should say that i prefer shorting to buying long - it just comes easier, and if you pick the right stock, it will go down even when all the indicies are rallying. that being said, i do find myself latching onto bearish doom and gloom news.

one reason i like to short is because i consider it to be going against the norm, the establishment, 99% of retail traders out there.

also, you can make broad sweeping generalizations about bears and their predictions about crashes year in and year out, what really matters is being in the right stock at the right time, enough said. there are just as many perma bulls out there as perma bears.

could you please share those blogs that you refer to that are very bearish? everything i read is bullish... except for Tim Knight...

Thanks - enjoying the discussion

Pradeep Bonde said...

For obvious reason they cannot be named, but they are amongst the top 5 blogs on stock investing by followership count.

Different thing work for different people and I know couple of traders who only prefer shorting. That being said as you said it boils down to picking right stock.

But if one has to develop a good equity selection methodology, I would always recommend one which involves going long.

The logic is very clearly explained in this Richard Donchian guideline:
In a market in which upswings are likely to equal or exceed downswings, heavier position should be taken for the upswings for percentage reasons - a decline from 50 to 25 will net only 50% profit, whereas an advance from 25 to 50 will net 100%

walter said...

hard to argue with that last bit about net gains...