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Leaders, followers and independents

Broadly, market participants are either leaders, followers or independent thinkers. Each group can be subdivided into good or bad.

A good leader will make the best returns. Their followers will ensure that their trades deliver accelerated returns and they will often avoid losing even on bad bets. Because they are competent, their followers will also win on average and so their position as leader is sustainable.

A bad leader will make similar amounts of money to a good leader for a while until their followers eventually realise that they are losing overall. This can take some time as initially bad calls may deliver returns for most followers in a similar way to how a pyramid scheme can be sustained for a while.

A good independent thinks and acts alone. They will make less than a similarly good leader as it will take longer on average for their investments to reach maturity. Initially, they can also underperform bad leaders and good and bad followers due to being less likely to benefit …

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