Groups and Gangs, Leadership Quality and Ourselves

Sun, Jun 22, 2014 - 2:56pm

In the alternative investment media I read a lot of criticism of the leaders of countries, and corporations, and also banks. There seems to be a view that leadership is lacking, or should I say good leadership is perceived to be lacking. On the other hand, bad leadership is in common supply. So what is going on?

The person who rises to the top of a large organization, like a multinational corporation or a nation surely can not get there without being good at something. So either the people who choose the leaders are unwise or uninformed, or simply a bad judge of these things, or it’s a fix, and the leaders rise through the ranks against the opposition and competition of their peers because they have an invisible supporting sponsoring power acting on their behalf. They have “pull”.

I think it’s actually a bit of both.

For example, it is often said that the elected leadership are - let us say - not the sharpest tool in the box. Comedians make a good living about putting this across in a pithy and humorous way, and I rarely see someone get up to heckle such a tirade act.

So is it true? Well the same alternative media tend to comment about the lack of awareness of many of the population … the “sheeple”. Isn’t it possible that the sheeple have gotten politicians who represent them exactly? That is, the political leaders are merely senior rank sheeple?

But if we look into this it does not take long to discover that many of the leaders have had interesting pasts, like careers in intelligence, or the military, or they have law degrees which I am sure do not get handed out willy nilly. So what gives? One possible explanation is the wolf in sheeple’s clothing. (I apologize for bastardizing the classic fairy tale story by either or both Charles Perrault and The Brothers Grimm.) But I think this has merit. The ruthless either (A) wish to be seen as almighty and feared and (thus) respected, or (B) they wish to hide and masquerade as the best friend to be trusted(which of course provides them with opportunity and a ready supply of fresh meat to work on). This is plausible.

Now if we add the requirements of democracy, the need to acquire votes rises in importance. The ruthless leader gets elected when the sheeple desire his cruel-power qualities, maybe during wartime, and during the rest of the time the winning leaders look like that avuncular father-grandfather figure who has broad appeal, in a similar way that presenters of evening family shows do.

So the masses choose. They actually select out from the pack, and vote into power, ruthless smooth talking liars who look friendly. What a surprise that world affairs turn out the way they do!

Now this brings in the idea that we all already have the leader we desire, or that we deserve, or a personality whom we wish we were more like ourselves. And it is a sad statement about modern society, that we only get that far in the thought process of choosing leaders who will have control over our futures and our lives.

But be that as it may, there is another leader who has followers and disciples and representatives, that I would like to discuss. But this leader is a thing rather than a person. I am referring here to the price of our investment assets.

Cast your mind back to last week, when the price of gold and silver made a nice jump upwards. The prices of these assets broke upwards through a longstanding downtrend line, under which they has been confined, and been reduced for a year and a half.

Now some people look at charts and other people don’t. Some people read the news, others watch audio-visual news. We all have our different sources, upon which we receive the information and consider the state of the world as we see it.

So here is the 64,000 dollar question: When gold and silver rose in price, did you become more optimistic, and more positive after?

Be honest. It’s important so I'll wait....

Read on when you have answered to yourself as honestly as you can.

If you did, then your psyche took leadership from the price of silver or gold, and that altered your view of the world. The price became, for a while, your leader, and controlled your thoughts and judgment.

Maybe you use technical tools to evaluate the market, and you reply “I am not controlled by anything. I have no judgment in my trades my trading system does it for me!” Well maybe it does, but when price moved above your favourite moving average, or when your “system” was triggered by the price moving up, what exactly happened? The price instructed the system, and the system instructed you, and you accepted the orders from above.

Leader = guide = master of a group to whom decisions are delegated. That group could be the Republicans or the Democrats, but it can also be the Bulls or the Bears in the markets you trade.

So are you totally sure there is no “Pied Piper” playing a seductive tune for your subconscious? This requires to be rechecked often, because the worst weaknesses always come back when you stop looking for them.

From Tony Plummer’s excellent "Forecasting Financial Markets the Psychology of Successful Investing" (now in it’s 6th edition) have a read of this:

Energy and self-knowledge, in turn, contribute to the crowd’s ability to be self-organizing. Self-organization involves the control of the crowd’s members, and this enables the crowd to maintain its autonomy as well as to learn, adapt and evolve. In somewhat technical language, we have described the behavioural haracteristics of Le Bon’s ‘crowd’.

Aha! He just mentioned LeBon. The author of “The Crowd”.

Le Bon was one of Adolf Hitler’s favourite authors I believe. But please do not hold this against him. Hitler probably read everything there was to read about crowds and their motivation and control, so that's not Le Bon's fault!

His book was written rather a long time ago. Gustave LeBon was born in 1841 and died in 1931.

But given the “crowd – leader – individual” hierarchy I have described above, for a trader who values the power of independent thinking it might be a good idea to look at what he wrote in “THE CROWD A STUDY OF THE POPULAR MIND” .

Here is a sample:

“When, however, a certain number of these individuals are gathered together in a crowd for purposes of action, observation proves that, from the mere fact of their being assembled, there result certain new psychological characteristics, which are added to the racial characteristics and differ from them at times to a very considerable degree.

Organised crowds have always played an important part in the life of peoples, but this part has never been of such moment as at present. The substitution of the unconscious action of crowds for the conscious activity of individuals is one of the principal characteristics of the present age.

I have endeavoured to examine the difficult problem presented by crowds in a purely scientific manner—that is, by making an effort to proceed with method, and without being influenced by opinions, theories, and doctrines. This, I believe, is the only mode of arriving at the discovery of some few particles of truth…….. To belong to a school is necessarily to espouse its prejudices and preconceived opinions.

……. why, for instance, after noting the extreme mental inferiority of crowds, picked assemblies included, I yet affirm it would be dangerous to meddle with their organisation, notwithstanding this inferiority.

The reason is, that the most attentive observation of the facts of history has invariably demonstrated to me that social organisms being every whit as complicated as those of all beings, it is in no wise in our power to force them to undergo on a sudden far-reaching transformations. …….which explains how it is that nothing is more fatal to a people than the mania for great reforms, however excellent these reforms may appear theoretically. They would only be useful were it possible to change instantaneously the genius of nations.

…… Men are ruled by ideas, sentiments, and customs—matters which are of the essence of ourselves. Institutions and laws are the outward manifestation of our character, the expression of its needs. Being its outcome, institutions and laws cannot change this character.

The study of social phenomena cannot be separated from that of the peoples among whom they have come into existence.

Given that something as simple as a price, can take leadership of real people and their investing purchasing power, any book which has chapters entitled: THE IDEAS, REASONING POWER, AND IMAGINATION OF CROWDS or THE LEADERS OF CROWDS AND THEIR MEANS OF PERSUASION is likely to make mighty interesting reading. But only if you honestly admitted that you are just as easily hooked as everyone else! It’s difficult to improve on perfection! Me? I know I’m a mere mortal …..

So the next time you hear your mouth or keyboard criticize the leadership’s ineptitude, foolishness, or evasive ethics, take a quick look at your peers, look at your motivations, including things as seemingly innocuous as the price of silver or gold or the stock market, then look inside. Are you "fitting in?" Is your thinking really all that independent as it appears to be? If not, then what things outside are being judged incorrectly right now, and in the past?

Here is a starting point:

Crowds, when they lose a leader, get disorientated, feel lost, and confused, and may mill about aimlessly, paralyzed from taking action. If you are a bull, and long something like let’s say, gold, and the price falls, then the bull crowd leader has gone absent for a period while that happened, right?

Well, did you, the member of the bull crowd, feel any of the above emotions inside the last time that happened? If you did, you’re human! But you do have a Pied Piper that can lead you astray in the future if not safeguarded against. Prepare and take countermeasures!

Argentus Maximus

The author posts daily commentary on the gold and silver markets in the TFMR forum: The Setup For The Big Trade. More information about the author & his work can be found here: RhythmNPrice.


Author's comment: if you look Plummer's book up on Amazon, there are a couple of bad reviews. Don't let them put you off! They are, in my opinion, ill advised "Pied Pipers", who don't recognize this insightful source for what it is. His latest book is very advanced and specialized for Gann students, and not like Forecasting (discussed above) which has broad appeal, and I'll review that separately.

About the Author


Jun 22, 2014 - 2:59pm
Jun 22, 2014 - 3:14pm


in the out-crowd - never been much of a "joiner."

gold slut
Jun 22, 2014 - 3:27pm

Wonderful post Argentus. 

Wonderful post Argentus. Thought about this a lot myself as someone with limited dry powder has to. To be a truly gifted stacker, you need to be a Vulcan, myself, I am a rubbish Vulcan, but at least I am a stacker!

Jun 22, 2014 - 3:41pm

Gold climbs to fresh 1-month high

21 Jun, 2014, 03.47PM IST NEW DELHI: Gold prices today jumped up by Rs 100 to trade at a fresh one-month high of Rs 28,725 per 10 grams in the national capital on increased buying by stockists and investors. Silver, however, held steady at Rs 44,900 per kg in restricted buying at prevailing levels. Marketmen said increased buying by stockists and jewellers to meet wedding season demand, mainly attributed persistent rise in gold prices but a weak trend overseas, capped the gains. A weak rupee against the dollar, making gold imports costlier also influenced prices, they said. In Delhi, gold of 99.9 and 99.5 per cent purity advanced by Rs 100 each to Rs 28,725 and Rs 28,525 per 10 grams respectively. Yesterday, it had recorded its biggest single- day rise of Rs 605 this year. Sovereigns held flat at Rs 24,900 per piece of eight grams. On the other hand, silver ready ruled steady at Rs 44,900 per kg, while weekly-based delivery gained Rs 190 to Rs 44,570 per kg on scattered support. Silver coins, however, lacked necessary follow up support and plunged by Rs 2,000 to Rs 78,000 for buying and Rs 79,000 for selling of 100 pieces.

Jun 22, 2014 - 3:57pm

When gold and silver rose in price, did you become more optimist

Yes and No. Yes, it was an encouraging move.
No, we have been higher than this fairly recently.
No, I have some dry powder coming at the end of the week, and I was already planning to use it. Which is not to say that we may not have given up some of this move up by then.

Jun 22, 2014 - 4:06pm

Wow! How about this?

When have you ever seen the term "petrodollar" used in mainstream media??

Tehran (AFP) - Iran's President Hassan Rouhani warned on Sunday that Muslim states which funnel petrodollars to jihadist Sunni fighters wreaking havoc in Iraq will become their next target.

Rouhani did not name any country, but officials and media in mainly Shiite Iran have hinted that insurgents from the Islamic State in Iraq and the Levant (ISIL) are being financially and militarily supported by Saudi Arabia and Qatar.

"I advise Muslim countries that support the terrorists with their petrodollars to stop," Rouhani said in remarks reported by the website of Iran's state broadcaster.

Jun 22, 2014 - 4:13pm
Jun 22, 2014 - 4:19pm


Wow! Public faith in Congress drops to record low 7%, lowest level Gallup has recorded for any institution in 41 yrs.

Jun 22, 2014 - 4:25pm

Re: Wow! How about this?

Got to get the masses used to the term if the war in the MIddle East will bring it to an end. I definitely think the ISIS forces in Iraq are dangerously close to Saudi now. I'm not convinced the Saudi Royal family will be able to control these groups when push comes to shove. Basically if/when Baghdad falls, look out Saudi.

Jun 22, 2014 - 4:35pm

Renegade Libyan general urges Turks, Qataris to leave east Libya

A Libyan renegade general has called on all Turks and Qataris to leave volatile eastern Libya, accusing the two countries of supporting “terrorism,” his spokesman said June 22. Retired General Khalifa Haftar has declared war on Islamist militants in eastern Libya, part of growing turmoil in the oil producer where the government is unable to control armed groups which helped oust Muammar Gaddafi in 2011 but now defy state authority. The Tripoli government says Haftar has no authority to act but its orders are routinely ignored in much of the oil-producing country, especially in the east where Islamists, tribes and militias vie for control. “All citizens of Turkey and Qatar should leave Libya within 48 hours. The deadline started last night,” Haftar’s spokesman, Mohamed El Hejazi, said. “They should leave the part of Libya from Imsaid [at the Egyptian border] to Sirte [in central Libya] and we are not responsible for these two nationalities on the Libyan land.” A Turkish embassy official declined to comment. Turkey moved staff of its Benghazi consulate to Tripoli this month. Qatar’s mission could not be immediately reached for comment. Turkey and Qatar both have supported the Muslim Brotherhood, an Islamist movement which has been declared a “terrorist” organization by Egypt and Gulf countries such as Saudi Arabia. There has been speculation among analysts that Haftar has the support of neighboring Egypt and of Gulf states such as the United Arab Emirates, which like the West are worried about Islamist militants exploiting the chaos in Libya. Haftar had last week accused Qatar of supporting armed militias in Libya. The latest fighting in Libya comes days before a parliamentary election that ordinary citizens hope will ease the chronic political infighting that has paralyzed decision-making since the last vote in the summer of 2012.

Key Economic Events Week of 10/21

10/22 10:00 ET Existing home sales
10/24 8:30 ET Durable Goods
10/24 9:45 ET Markit flash PMIs
10/24 10:00 ET New home sales
10/25 10:00 ET Consumer Sentiment

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Key Economic Events Week of 10/21

10/22 10:00 ET Existing home sales
10/24 8:30 ET Durable Goods
10/24 9:45 ET Markit flash PMIs
10/24 10:00 ET New home sales
10/25 10:00 ET Consumer Sentiment

Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

Key Economic Events Week of 10/7

10/8 8:30 ET Producer Price Index
10/9 10:00 ET Job Openings
10/9 10:00 ET Wholesale Inventories
10/9 2:00 ET September FOMC minutes
10/10 8:30 ET Consumer Price Index
10/11 10:00 ET Consumer Sentiment

Key Economic Events Week of 9/30

9/30 9:45 ET Chicago PMI
10/1 9:45 ET Markit Manu PMI
10/1 10:00 ET ISM Manu PMI
10/1 10:00 ET Construction Spending
10/2 China Golden Week Begins
10/2 8:15 ET ADP jobs report
10/3 9:45 ET Markit Service PMI
10/3 10:00 ET ISM Service PMI
10/3 10:00 ET Factory Orders
10/4 8:30 ET BLSBS
10/4 8:30 ET US Trade Deficit

Key Economic Events Week of 9/23

9/23 9:45 ET Markit flash PMIs
9/24 10:00 ET Consumer Confidence
9/26 8:30 ET Q2 GDP third guess
9/27 8:30 ET Durable Goods
9/27 8:30 ET Pers Inc and Cons Spend
9/27 8:30 ET Core Inflation

Key Economic Events Week of 9/16

9/17 9:15 ET Cap Ute & Ind Prod
9/18 8:30 ET Housing Starts & Bldg Perm.
9/18 2:00 ET Fedlines
9/18 2:30 ET CGP presser
9/19 8:30 ET Philly Fed
9/19 10:00 ET Existing Home Sales

Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
9/11 8:30 ET PPI
9/11 10:00 ET Wholesale Inv.
9/12 8:30 ET CPI
9/13 8:30 ET Retail Sales
9/13 10:00 ET Consumer Sentiment
9/13 10:00 ET Business Inv.

Key Economic Events Week of 9/3

9/3 9:45 ET Markit Manu PMI
9/3 10:00 ET ISM Manu PMI
9/3 10:00 ET Construction Spending
9/4 8:30 ET Foreign Trade Deficit
9/5 9:45 ET Markit Svc PMI
9/5 10:00 ET ISM Svc PMI
9/5 10:00 ET Factory Orders
9/6 8:30 ET BLSBS

Key Economic Events Week of 8/26

8/26 8:30 ET Durable Goods
8/27 9:00 ET Case-Shiller Home Price Idx
8/27 10:00 ET Consumer Confidence
8/29 8:30 ET Q2 GDP 2nd guess
8/29 8:30 ET Advance Trade in Goods
8/30 8:30 ET Pers. Inc. and Cons. Spend.
8/30 8:30 ET Core Inflation
8/30 9:45 ET Chicago PMI

Key Economic Events Week of 8/19

8/21 10:00 ET Existing home sales
8/21 2:00 ET July FOMC minutes
8/22 9:45 ET Markit Manu and Svc PMIs
8/22 Jackson Holedown begins
8/23 10:00 ET Chief Goon Powell speaks

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