Stocks: Animal Farm

We’ve learned about bulls and bears in our previous article ‘Stocks: Bull and Bear’. But do you know that there are other animals in the stock market jungle too?

Chicken

Chickens are afraid to lose anything and low-risk takers.

Thus, they only turn to money-market securities or get out of the volatile markets entirely.

It’s true that you should never invest in something risk. However, if you avoid risks and the market completely, the chances of you expecting any return will be low. 

Pigs

Pigs are high-risk investors and they only want to make quick money in a hurry. 

They are impatient, greedy, and emotional about their investments. Pigs buy on hot tips and invest in companies without investigating and learning about their investments first.

Pigs are the ones who likely to lose money in the market as the bulls and bears usually reap their profits. Like investment guru Jim Cramer says, “Bulls make money, bears make money and pigs get slaughtered.”

Stags

Stags are short-term speculators or day traders who attempt to make profit by buying and selling stocks in short time frame. 

Stags are not interested in a bull or bear run. They buy the shares of a company’s initial public offering or IPO, and sell them once the stock is listed and trading commences. They assume that the price of a stock will rapidly increase over the short-term which enables them to make a fast profit.

Wolves

Wolves are individuals who attempt to manipulate the market.

Remember Jordan Belfort from the movie The Wolf of Wall Street? He was convicted on charges of stock fraud and market manipulation.

Some powerful individuals might employ the wolves to make money by unethical means. Some investors also may use “wolf hunting” strategy to drive a company’s stock to the ground by selling the stock short. 

Sheep

Sheep are usually investors who have no strategy in mind and trade based on emotion. They also tend to simply listen to others for financial advice and guidance. Like a sheep, investor usually just follows and relies on a shepherd for guidance.

Hence, they often miss out on the best strategies and moves in the market. Sheep can be easily devoured by a bull or bear if they aren’t in the right place in the market.

Ostrich

Ostriches ignore any bad news that is likely to affect his or her investment in the hope that the problem will simply go away. In the wildlife, ostriches tend to bury their heads in the sand when it senses danger.

When facing with market risk or stock-specific risk, ostriches could lose even more if they do not “get their heads out of the sand” and take instant recovery action. 

Images are from Wikimedia Commons.

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