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"The Rise and Fall of a Sheeple Guru"

With the boom in technology stocks and the NASDAQ came online trading, which inevitably led to IRC channels where traders would congregate to bond. With such a powderkeg of greed, fear, and money, the con artists and scum of the universe sought to gather their flocks and fleece people for a living. This is my version of how a no-name loser becomes sacrosanct and immune to criticism.

Introduction

There are many new investors who enter the market daily, and percentage-wise, there are plenty of gurus-in-waiting spawned as well. They come and go, most not making much of a splash at all, but some becoming bright as a star and then fizzling out once they've spent themselves. They can come in bunches, when the market is particularly bullish, and they can come individually, bravely calling market bottoms after long bear markets.

But invariably the guru starts off like most people, pulling together a small stake and putting it to work on the market, probably succeeding at first but then encountering trouble as the grind of trading takes effect. He then probably falls prey to one of the current hot gurus, since their calls provide hope and logic for a fledgling.

A guru who is to gain any sort of distinction will study lots of different techniques and at some point deservedly accumulate a larger stake using decent money management and good sense.

But the guru oftentimes has a weakness for attention and for fame. Making money is not enough for the guru, as he must receive a pat on the back for his market calls.

Setback

The guru-to-be gets more daring. He has plans to vault himself to the forefront of the guru world and show everyone how great he is. At this point he makes foolish and stubborn trades and loses his pot because of a lack of humility. He has to stop and collect himself.

The guru-to-be goes back into hiding, studying more and returning to better tactics. Most gurus-to-be would drop at this stage, either voluntarily quitting or washing out.

Exploitation

If he makes it through this psychological inflection point, the guru-to-be will fashion his monumental setback and survival and reemergence into a sort of Resurrection from the dead story in order to convince potential followers of his greatness. Somewhere along the line he figures out that this will work out great for him and he proceeds to fully exploit anything in others' and his own personalities that will make people more susceptible towards him.

Funny thing is, he is usually doing all this subconsciously. He feels the whole time that he is doing a service to anyone who would be brave enough to follow his calls and make the serious buck he is. At no point does it occur to him that he's a scammer.

The guru-to-be now becomes extremely visible and vocal on IRC trading channels. He makes plenty of calls on where the market is going, where individual stocks are going, gives interpretation of others' advice/sentiment, hypes when he's right, ignores when he's wrong. This all of course attracts attention from sheeple and cynics alike. Most won't pay heed to what he has to say, but the few most prone sheeple will begin to listen.

He becomes a fixture in the channel, and people start asking him for his opinion on stocks and the market. He has now become a guru, and it makes him happy. He feels important now.

Sheeple Guru!

But not important enough.

This is the big play. This is where the guru becomes just another schmuck or is anointed with the title of "sheeple guru", the ultimate of gurus. Lots of money and fame hangs in the balance, and all people who make it as far as guru will make at least one power play to grab the title.

Here is when you see the web page come in, the source for all the guru's followers to converge and gather to see the latest declarations from the mountain. Cynics become more vocal at this point, along with the guru, and every call the guru was wrong about, cynics will pick up on and remind him of it. Now, a successful sheeple guru-to-be will deflect and ignore this and continue doing what he does. When the guru is successfully making his move, you will notice that his followers will attack the cynics, not with a mere "everyone has a right to his own opinion", but instead with things like "he's right far more often than he's wrong" and even more severely, "you're just envious because you're not making money like he is".

The sheeple guru slide move is complete when OTHER people begin to ignore the sheeple guru's bad calls, and only mention the good ones. He becomes the leader of every market move, the one who knew where it was going before it magically decided where it wanted to go. People will become extremely protective of the sheeple guru, even going so high as to the go to the top, where the ops of the channels ban any dissenters or naysayers. The invulnerability of the guru has been assured and he wins.

Subscription

Yet that is still not enough. This fatal hubris, typical of any real sheeple guru, will lead him to get even bolder, by starting to charge people to hear what he has to say, and to make bigger and more specific calls about the market.

Oh, why could he not quit?

The sheeple guru's lamer instincts kick in and he sees a money-making opportunity in making that popular web site into a full-fledged subscription based service, offering his daily market direction commentary as well as all sorts of sophisticated, completely unintelligible homemade timing indicators that rival even the worst of tea leaf and crystal ball reading.

And it pays well too! $30-300/month per person to read the daily blah blah that may or may not come true...but it doesn't matter anymore! He's a respected and protected person, remember?

Degradation

It is not uncommon for gurus to bona fide make money for their followers. But this usually only happens for the duration of one market move, and if he's decent, the reaction against that move. Few are able to successfully continue their luck and call followup runs. But during that success-inducing run, man. He's on top of the world.

The market always changes and eventually the sheeple guru will lose his mojo and followers will feel the hurt in their equity and confidence as a result.

Gradually the sheeple guru gains some ex followers as enemies and while others try to protect him, his words have less and less impact on them. He begins to be seen as a joke and is ignored by many, just as he started. Perhaps he DOES know how to make money, and he can fall back on that if he's any good. But the fame and respect are gone if he didn't cash out early on the scam. It gets to the point where the subscriptions die, he may possibly get litigation brought against him for pumping and dumping stocks, he may just disappear before things get even worse.

This is the rise and fall of a sheeple guru. Once he shines and dies, ten more take his place, and hundreds more fail in the attempt. But the end result is the same in all cases, he is a detriment to anyone who puts their own money into the market based on what he thinks (or says he thinks) will happen.

And this is a scam that goes higher up than one might imagine. Just think of your broker as a sheeple guru too, as well as anyone else who might get in a position that would warrant him the power to curry fame for himself.

Frightening, huh?

[Note: I would rather this be written with humor, but since I have as much humor as a spork, I will leave that to people like the Old Man.]

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