In the spirit of following financial and other “Gurus”

One of the issues that can be observed especially in the financial industry is the “herding” phenomenon. Already during 80s it was perceived as one of the main causes for the then ensuing international debt crisis, that kept the industry busy for the next decade.

What does the “herding” phenomenon mean? Today we would say that people are following a financial “Guru” that then transmits into the whole industry thinking and acting alike. We could also say that there are a few strong, charismatic and rationally intelligent people in the industry that got it right in terms of where the market is heading.

Hence, because these financial “Gurus” got it right a few times in the past, people tend to believe that they will always get it right…

Naturally, when faced with own market decisions, people tend to see what these “Gurus” have to say and will then normally base their own “rational” decision on that other opinion.

Before you know it a whole industry will follow that same direction without further reflection. A whole industry will thus copy financial structures, risk assessment systems, valuation methods and especially so-called expert opinions. Why? – Because everybody else is doing it also. Hm.

Hence, the term “herding” was coined which obviously comes from the farming industry where sheep and cattle are herded together.

This sometimes is okay and sometimes not. To know when it makes sense to follow and when it does not make sense to follow requires a high amount of individual thinking as well as the platform for being allowed to voice a contrary opinion without fear. More often than not, though, this herding phenomenon sooner or later leads to chaos.

The problem with the herding phenomenon based on the opinion of a few “Gurus” is of course clear. In this secular world of thinking no individual is right all the time. It is impossible as it is precisely the play of this world that everything and anything is in relation to each other. We say that everything is relative in this world. Therefore, absolute truth is not possible either in this relative system. There can only be relative truth (which is of course also why people often get into arguments about right and wrong – but that is a different topic).

Having said this, it naturally makes no sense whatsoever to blindly and unreflectively follow the opinion of anybody – never mind how successful their accuracy rate has been in the past. But to constantly reflect and contemplate. It follows, therefore, that constant vigilance is due.

Interestingly, we find similar phenomenon in the spiritual area of life. In this area, people that would fall prey to following unreflectively the opinion of a financial Guru would at the same time clearly distance themselves from following a self-proclaimed spiritual Guru.

Here is where it gets tricky. – Why? In the spiritual field there is the possibility to experience absolute truth whereas in the relative world it is not possible. Absolute truth may be experienced, but it is direct and personal and requires in general a true spiritual guide (who has experienced and continues to experience absolute truth) as well as a lot of personal effort.

Therefore, it may make sense for an individual to submit themselves wholeheartedly to the guidance of a spiritual guide. A true spiritual guide (or Guru) will be able to guide a true seeker of truth in such a way that the seeker will be able to experience truth for him-or herself.  A true teacher will never ever stand in the way of a seeker of truth but will always help the student in such a way that the student can experience truth for him-or herself through his or her own dedicated effort. But still, the student will and has to remain vigilant!

A false, self-proclaimed Guru will not be able to guide anybody to absolute truth or absolute reality! Hence, in all scriptures there are warnings to “…beware of false prophets”. Nowhere is it stated in the scriptures to “follow a guide blindly and unreflectively”! On the contrary, more often than once it is stated to test and scrutinize a teacher during a period of time in order to be sure that that person has actually experienced truth and is able to guide accordingly.

This is precisely what is missing in the financial industry. Once a person has gotten it right a few times and has a certain amount of followers, very few will scrutinize and reflect anymore, including the “financial Guru” him-or herself. Certainly, the financial “Guru” will not just step aside to let somebody else reap the fruit.

As such, it would certainly not harm for the secular world to remember the wise warnings and guidelines that have been transmitted eons ago in all spiritual paths by the adepts, saints and sages. OM.


Next week, I’ll try and remember to talk about a few well tested guidelines as to how to recognize a true teacher.