The Gold Report: We are going to talk about "lemming investing," the theme of your most recent newsletter. Who or what are lemmings and how does their behavior drive the market?
Roger Wiegand: The lemmings that drive the market primarily are the big funds, typically mutual funds that manage 401(k) and individual retirement accounts. Most of those funds are set up on a buy-and-hold basis. There are hedge funds with lemming behavior as well, but the hedge funds are more often traders. They are creating a track record of lemming investing as well because of their huge size—billions and billions of dollars. The other sector of the market is the retail investor, with approximately 30% of the market.
"We think the old paradigm of buy and hold forever is not a good way to go."The lemming investor market would be most all of the funds and all of the smaller investor's money. The large funds primarily invest money for the smaller investors (being the lemmings). They really control what's going on, and they compose 70% of the market. And they do, in fact, establish the trend. Non-lemming investors are those with large accounts who trade for their own pockets and the pockets of the seven figure and larger trader/investors. This is the sector leading/driving the market with mutual fund managers investing lemming money.
TGR: In your recent newsletters, you discuss commonly held investment myths. Near the top of the list was that the largest "professionals" always have special insight unavailable to smaller professionals and individuals. Is that what you're stating here? (more)