I don’t have a lot of specific investing thoughts lately which is ironic because there’s been more activity than usual in my PA. Two full positions have been added – a brewer with big emerging markets exposure and a maker of giant bespoke valves for oil pipelines. Decisions will be made this week on a big winner in biotech and a big loser in telecom equipment.
One thing I’ not doing is trying to beat the index because I’m more than a little concerned that its infected by twitter or, to be more precise, infected by the same things that have made my timeline so depressing lately.
The big problem in market prognostication currently is that the action has moved beyond the view of most investors. Central bank involvement in yield curves has made currencies the more accurate gauge of regional macro health. Currencies are notorious for trading away from fundamentals for years at a time and unlike debt, there is no CDS market for a second opinion. To make mattes worse, the world’s second largest economy – the primary driver of commodity prices – has largely pegged its currency while under the surface a misguided Manhattan Project builds a massive bad debt bomb.
With equity performance determined by central banks in a big way – God-like, infinitely wealthy exogenous entities – the MarketTwitter has taken to squabbling like medieval clerics. Every data point is held up like pieces of the true cross: You fools! I HAVE THE TICKET TO YOUR INVESTING SALVATION!
The degree of this triumphalism seems to be metastasizing rapidly. There has always been a maddening segment of twitter who’s whole existential value (an extension of academic life, one supposes) was realized by a desperate search for political heresy, after which the trumpets could be blown and the forces of righteousness led to vanquish the heretic. In investing, this practice was previously confined to the gold bugs.
The predictable danger in market twitter was the acceleration of investing time frames but at first it seemed like the medium was too open, too conducive to correction, to allow a new one per cent to dominate the discussion. But at least in my timeline bullying, both in politics and investing, has become the norm. Being right and living your life the way you see fit is no longer enough – “macro tourists”, “bearshitters” and any random political thoughts not conforming to the orthodoxy must be humiliated and driven off. Twitter, once a place to connect and ask questions, has given way to the exercise of follower power.
Tadas at Abnormal Returns linked to a piece on the isolation involved in being a value investor and I’ve written about the same thing. It’s odd how well this phenomenon applies to MarketTwitter at the moment.
Nobody wakes up in the morning and thinks “You know, I really feel like herding today. Just joining up with the biggest, most popular group I can find to make myself feel psychologically safe.” But as always our subconscious is driving the bus while letting our conscious minds think they’re in charge. The subconscious will feed the herding instinct to us in delicious, bite-sized portions like “if I say tweet something really funny and someone with 10,000 followers RTs it, then I’ll really belong with the hitters.” The impulse is in no way different then holding a widely-held stock that doubled last year and now trades at 25 times sales.
Ever thus, I guess. Like television, those looking for answers rather than affirmation could desert as Twitter devolves into utter dreck but hopefully not. As long as new centers of influence keep arising, things are likely to stay reasonably healthy. But
I have no idea where the market’s going to be in 12 months and for all the sneering neither does anyone else. Hopefully all this shit is temporary – everyone’s just Vitamin D-deprived and irritable – and spring finds a more constructive community.