Requiem for Investing Twitter

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.

8 thoughts on “Requiem for Investing Twitter

  1. kris says:

    I have the feeling that you are absolutely clueless as to how great and deep this post is.
    This is your absolute best.
    Thank you.

  2. tangentstyle says:

    Great post. Always love looking at the meta process and its challenges.

  3. [...] The changing value of Twitter for investors.  (Interloper) [...]

  4. alexander wayland-james says:

    well its the same with American Idol/spinoffs… thats the democracy/free market we live in. Random things happen until something works and then everyone will jump on the bandwagon until only one is left standing.

  5. JB says:

    Oh, its not all bad. Twitter led me to this great post, so all is not lost yet. :)

    But, I’m very, very interested in currency risk today. And, the fact that currencies are the place of action now (or will be even more so, soon). I’m struggling to learn about currencies and working through books, but it seems like we haven’t had the situation we are in now, ever in history. I’d love to know if you have more thoughts to share on the currency risk faced by the major economic blocs today. What are the tools to use to look at currency risk?

  6. [...] Shifting Strategy, Build New Wall Street Cases (DealBook) • Requim for Investing Twitter (Interloper) • Performance of Morningstar’s New Analyst Ratings For Mutual Funds in 2012 (Wall Street [...]

  7. [...] See full story on interloping.com [...]

  8. Steve says:

    Got a chuckle from the gold bugs reference. Don’t ever repeat that at zero hedge tho!

    Seriously though, some of the malice and bullying vis a vis investing may be a direct result of the influence of social media comments (FB, Twitter, SeekingAlpha, others) related to investing on daily pricing. I have witnessed first hand how “chatting up” even (and perhaps especially) obscure assets has resulted in price movements which resulted in trade completions.

    Cyber-investo-bullies may in fact be trying via social media to protect positions – in some cases violently because they know the algos are listening.

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