In Greek mythology, the siren song was virtually irresistible. It lured many sailors to their deaths.
As told in Homer's Odyssey, Odysseus had his men plug their ears with wax to resist the seductive call. Odysseus tied himself to his ship's mast so he could listen without being compelled to jump to the rocks.
His plan worked: Odysseus and his crew navigated the waters safely.
The siren song has a modern equivalent today: -- it's the almost irresistible optimism which is luring those "on the sidelines" back into the stock market.
"The very latest figures...show that the public in January finally started 'plowing cash back into these [stock] funds' at the fastest monthly rate in seven years."
Elliott Wave Theorist, February 2011
The power of collective psychology reaches far and wide, and is no respecter of persons. The market technician is as susceptible to the siren song as the fundamentalist. The "smart money" is taken in as quickly as the "dumb money." Traders and investors alike are seduced by the sweetness of the sound.
There are exceptions. A relative few market participants manage to "plug their ears" or "tie themselves to the mast." They think and act independently from the herd.
Right now, the consensus is a most formidable crowd: hedge fund managers, individual investors, futures traders, financial advisors, and mutual fund managers. These groups have turned bullish, and extremely so. Individuals within these groups communicate their market optimism through many actions and words. The independent thinker has to be most careful not to succumb to the contagion.
"Who am I with my finite knowledge to bet against them?" you may ask. But you don't have to.
Realize that those who resist prevailing market psychology can do so successfully without acting directly against the crowd. As EWI's Robert Prechter says:
"If you are safety conscious, recognizing a strong consensus doesn’t mean you must take the risk of investing in the opposite direction; but it does mean that you must avoid investing in the direction of the consensus."
Elliott Wave Theorist, March 2011
Indeed, if you are safety conscious, we know of a popular manual from the SafeWealth Group that is brimming with valuable and useable financial safety information.