Are We Lemmings, Or
Are We Traders?
A few years ago I read an article that ended a long standing
belief on my part. On an "Urban Legend" website, I discovered
that lemmings do not herd together and commit mass suicide
by jumping off cliffs.
Why I believed this in the first place I do not know,
but I guess I never had any reason not to.
The legend apparently began when during a 1958 Disney
nature documentary, the film crew induced lemmings
into jumping off a cliff into the sea. They then documented
their suicidal behavior and used it in the movie "White
There goes one more childhood belief.
Real Life Lemmings
But the suicidal behavior of lemmings, though not true of lemmings themselves,
does have close counterparts in the real world.
What? Can this be true?
Think of any stock market bull rally that is nearing a
top. Volume spikes as traders rush to buy stocks they would
not have even looked at a few days or weeks prior. Sentiment
is at bullish extremes and every industry, regardless of
profitability, is relentlessly purchased to extremes of
In the very midst of this buying frenzy. When traders
are going to bed each night and dreaming of being rich,
there are those few individuals who refuse to be affected
by the emotions of the rally. They start taking profits.
Some start selling short.
Before long, even while the "lemmings" are still buying
and trading volume remains high, there is a subtle shift.
New highs are not held. New intra-day highs become losses
at the close. Soon the shift become real selling and the
But the lemmings, who are emotionally still extremely
bullish (running in herd fashion towards the cliffs) hang
on. Finally, they start taking losses and as those losses
grow, the lemmings start to feel the pain. They are not
sleeping as well. The dreams are turning to nightmares.
Finally, the lemmings stampede. They start selling. The
selling increases and after awhile, it becomes a deluge
as all the lemmings try to unload their huge losing positions
at the same time. They are now jumping off the financial
cliffs en masse.
Real Life Lemmings Hit The Bottom
Now the lemmings have cashed out most of their positions.
They have had it with stocks. They go to sleep with the
security of knowing they will never put themselves in such
a losing position again. Not ever!
As the lemmings take comfort, some astute traders see
an advantage. They start buying into the severely depressed
stock market. Slowly the market turns higher. More traders
jump in and before long, another market advance is born.
Never fear, our lemmings will not be swayed. The vast
majority of them, having been burned once, are not going
to be burned again. Or so they say.
happens over, and over, and over again. From
Dutch Tulips, to great financial crashes. History
But oh, the easy money they are missing. The financial
news talks incessantly about the profits being made. Their
friends are making gobs of money, or so they are told.
Slowly but surely the lemmings start to buy and a new bull
rally to begins to form.
The next cliff is waiting patiently for them. It happens
over, and over, and over again. From Dutch Tulips, to great
financial crashes. History always repeats.
The psychology of fear and greed has been repeating like
this for hundreds of years. You would think the "herd" would
get smart, but very few do. It is hard to change emotional
responses that are hard-wired into the human psyche.
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Do Lemmings Ever Evolve?
To answer this question, we must look at the very astute
traders who are buying near the bottoms, and selling near
Are they devoid of emotions? Are they like robots who
are never swayed by the sentiments of the majority?
Actually, most were former lemmings. Experience is what
makes a successful trader. Most have experienced "lemming
losses" but these few realized it was a losing game.
The plain truth is, they are following a trading strategy.
These special individuals, who realize profits year after
year and are never in that crowd of lemmings who are jumping
off cliff after cliff, are NOT lacking emotion.
They realized it was a losing game and they exited the
emotional roller coaster that most stock market participants
are riding, and began following "unemotional" trading plans.
This is what FibTimer is all about.
We have been there ourselves. We understand the only way
to profit in the financial markets is to part from the
herd. We have done that by creating, and following ourselves,
unemotional timing strategies.
Unlike many other timing services which apparently practice
voodoo in their timing signals, we are trend traders. We
do not sift through tea leaves to make our buy and sell
decisions. We identify trends and when a new trend is established,
we trade it.
have NEVER found anyone who can foretell the
If the trend is false, we exit quickly. We exit our losing
positions quickly and let our winning positions ride.
Unfortunately, many who look for timing services, and
then start following a timing strategy, are actually looking
for someone who can forecast the future. They WANT the
crystal ball readers.
They want to believe. They are lemming wannabe's.
They want someone to take their hand and lead them to
untold (and guaranteed) wealth by forecasting the market's
direction before anyone else knows it. They accept the
offered promises of riches because they "want" to believe.
We have NEVER found anyone who can foretell the future.
Sorry about that. Of course at every market top and every
market bottom there is someone who got it right. But getting
it right consistently is another matter entirely.
What we can do is tell you the truth. Successful trading,
market timing, can only be attained following an unemotional
strategy that buys low and sells high. By following a strategy
that cuts losses and stays with profitable trends when
If you follow FibTimer strategies, do not expect us to
follow the lemming herd. We stay far away from tea leaves.
We do not keep financial news on when we trade. If we are
bullish when the herd is on a buying rampage, that is nice.
But when we have a sell signal, we are out. No questions
asked, no second thoughts.
If you are looking for timing that works, we are the answer.
We are the anti-lemmings.
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Disclaimer: The financial markets are risky. Investing is
risky. Past performance does not guarantee future performance.
The foregoing has been prepared solely for informational
purposes and is not a solicitation, or an offer to buy or
sell any security. Opinions are based on historical research
and data believed reliable, but there is no guarantee that
future results will be profitable.