When volatility is reintroduced back into the market after a long absence, the effect is not unlike the lifting of a long-undisturbed rock – all the creepy, hideous creatures from beneath return to the surface and make themselves known.
The August market rout brought forth all of the commentators who thrive on investor confusion and feast on the fears of less experienced players. The start of this year is no different. The vitriol on social media is amped up to eleven.
The interesting thing, from a human perspective, is that the very nastiest comments and tweets always come from the people with the least invested in market outcomes. It’s almost as if having a real position on – using actual money – acts as a personality governor of sorts, a buffer between our worst potential qualities and how we present ourselves among our fellows. Bulls and bears with real money at stake can engage in civil discourse much better than noisemakers who are only marginally attached to the markets.
You can recognize these “Ministers Without Portfolio” from a mile away. They’re the ones with nothing at stake, no assets under management and no direct clients to answer to. They can criticize whatever everyone else is doing in the market with impunity, because they themselves are doing nothing at all. This freedom from any actual responsibility (or regulatory oversight) skews their commentary toward the audacious and the recklessly certain. Grand pronouncements about the coming misfortune for those who don’t listen to them are accompanied by much ape-like chest beating and a chronic selective memory problem.
It’s all quite embarrassing for the rest of the commentariat, which is mostly made up of people who are trying to say constructive things or help less educated investors make sense of what is going on. The Minsters, however, can blurt out whatever gets them the most attention, regardless of the psychological (or financial) impact on the unsuspecting audience being indiscriminately sprayed with it.
Fortunately, we live in a free society and everyone is entitled to share their opinions about the economy and the investment markets. Unfortunately, this means that the very small minority of misanthropes can ply their trade freely, preying upon the worst investment behaviors and instincts of those who come into contact with their bleak propaganda.
The important thing to remember, as a market participant with something real on the line, is that the Ministers are usually just play-acting and, as such, can be safely ignored. They are honking the horn and flipping the switches on a Fisher-Price steering wheel, desperate for some validation from the car’s adult driver. “Yes, sweetie, I see you! Excellent driving!”
Sometimes it’s hard to figure out who is more mentally ill: the guy taking Twitter victory laps for virtual trades, or the guy who retweets him.
One thing I’ve learned in recent years, as a general rule, is that the more bullying and carrying on you see someone doing, the less relevant they are to what you’re trying to accomplish as an investor.