The 12 types of trader: What Chinese zodiac signs tell us about animal spirits in the markets?
Animal spirits may be suppressed by easy money policies pursued by the world’s central banks, but no amount of money manipulation can contain traders, market makers and bankers forever.
Ultimately, as John Maynard Keynes explained in the 30s, we’re guided by those animal instincts and markets sooner or later respond.
But leaving the politics of QE and bond pricing aside, what sort of animal spirits are there? In the world of finance it’s easy to think it’s a simple toss of the coin - bull or bear - but there’s a lot more to it than that.
With the Chinese New Year approaching on 19th February and the year of the goat almost upon us, it’s worth thinking about what makes market traders, hedge fund owners, bankers and retail investors tick.
Sometimes depicted as a sheep, the goat is probably not designed for the cut and thrust of financial markets. Sincere, good at listening and of course easily swayed by those around them, it’s hard to see a good niche for the goat or sheep. Apparently ‘goats’ should avoid gold and coffee - commodity traders born in a goat year beware!
Curious and always wanting to learn new tricks, the monkeys of the world will sniff out the best AIM shares and have a go. Highly intelligent and innovative, it’s useful for banks and hedge funds to have a monkey or two about. But they can be arrogant and vain at the same time. Gold is a lucky colour.
Honest to a fault, the rooster will tell you how it really is. He’s not a diplomat but is meticulous and focused on the detail. Accountants and audits perhaps may be his best function within a bank, rather than the trading floor. A risky investment in February, April, June and September may be unwise, apparently.
Trustworthy and a reluctant leader, the dog is not that bothered about money. According to the TravelChinaGuide post for 2015, people born in a dog year can expect to be “an armchair theorist deficient in practical experience”, while “expenses will climb” and it is “best to avoid lending money and loans to others”. Janet Yellen was born in a dog year.
Pigs are good at sorting out problems, which is good as Mario Draghi falls in this year. However they’re also not good at communicating with others. Phrases like ‘detailed modalities’ spring to mind. Pigs are - traders and Mr Draghi beware - also gullible, naive and seldom very good with money.
Wouldn’t we all like to be the rat? Bankers and traders may well do as the rat is quick-witted. The rat race is not so-called for nothing. Rats are highly motivated, shrewd, thrifty, hard-working, ambitious and have an eye for figures. In fact they’re easily the best equipped to negotiate the cut-throat world of banking.
Get rich quick schemes and trying to make a fast buck on a trade is anathema to the logical, steady ox. Money is not an issue - he or she is never overdrawn and the books are always balanced. A long-term investor for sure, perhaps geared to managing pension funds or actuarial work rather than credit default swaps.
Markets set for another crash in 2015? Not in the eyes of the tiger. Whilst others may take this view the tiger is betting on yet more equity market bullishness. Ever the optimist, the tiger can be reckless and impulsive - probably not the ideal person all the time but great at making a big profit very quickly. Upside potential is his favourite phrase.
Certainly a good choice for any financial institution as people born in this year are better than good, they’re lucky. But the rabbit is also thoughtful and exercises good judgement - just the sort for making margin calls. Bonds and stocks look good in 2015 for people born in a rabbit year, according to TravelChinaGuide.
Dragons take risks, they make things happen and they are lucky. In other words they’re just about perfect traders. Anyone born in the 1952 dragon year will make the most money in 2015.
Not exactly the best reputation in the West, the snake is nevertheless careful and wise. They’re also good at communicating without saying a lot and they can expect good fortune in April and October. Mark Carney was born in a snake year ... interest rate rises anyone?