Beware…………………………….. it’s Correction Twitter!

Uh oh! It’s that time again – when a stock market correction turns our social network into a minefield of awful id and sophist super-ego, an unholy orchestra of crash calls and recriminations, a field of finger-pointing and frayed nerves.

There are only three worse Twitters than Correction Twitter: Olympic Games Opening Ceremony Twitter, Presidential Primary Debate Season Twitter, and the very worst, Oscar Night Twitter. After these, only Correction Twitter can hold a candle in terms of sheer repulsiveness.

The thing is, it has to run its course – like a fever, or a greyhound at a Florida panhandle race track. Our only hope is to simply ride it out and try not to block or mute too many otherwise nice people.

In order to help you navigate Correction Twitter and come out whole on the other side, I’ve compiled a list of some of the stuff you can expect to see. That way, you can smirk and go about your business, without undergoing any undue stress or aggravation.

Ten Notable Features of Correction Twitter:

1. Chest-beating: The market-neutral types who are long and short at all times, trading their heads off and likely never making any money anyway will be out in full force. This validates their investing style and, by extension, their lives. How many ways are there to say “I told you so” without actually using the words I told you so? Sit back and count ’em – you’ll encounter every possible version of this, all in bite-size 140 character bursts of schadenfreude or even the occasional tweetstorm. If only you’d have subscribed you’d be sitting pretty. Dumbass.

2. Retroactive top-calls: Did you say anything in the last few weeks that could possibly be construed as bearish? Great! Hunt down that tweet or post and recast it in this new light. Everyone’s doing it, jump in! Here’s mine, a gem from 9/30 in which I laid out the thinning of the market’s leadership bare for all to see, right at the S&P’s index highs:

Yes, I am a f***ing genius, thanks for saying so! Never mind anything else I’ve ever said, though – this was the overarching theme. Of course I’ll sign your book! Flattered!

3. Lashing out: People are losing money right now. It’s not permanent unless they’ve been running around like idiots with their portfolio. For most people, the decline will be temporary and life will go on. But that doesn’t mean it’s going to feel that way as the market sells off – especially at the speed with which it has. The last three days have broken a record for US stock market losses that dates back to November 2011. The decline has been merciless and swift and widespread. When they raided the cathouse, even the piano player got taken out.  It’s tough out there and people on the Twitter have short fuses. Perceived slights will be met with belligerence, differences of opinion will become insurmountable hurdles to civility. Try not to ruin any virtual relationships with people you respect.

4. Misattribution about the cause of the correction. Ebola! Europe! Taxes are too high! They’re also too low! Obama’s not instilling confidence! Neither is congress! And what about Putin!?! And China? Forgot if we said Europe already! What about the Dollar? And where the f*** is Mario Draghi’s Bazooka? And did you know they’re letting gays get married now? TOO EACH OTHER!?! Of course the market’s down!

5. An avalanche of statistics: What’s the average depth or duration of corrections? What’s the typical slope of the descent, or the typical rate of descent? What happens when the correction occurs in October. What if it’s in October but the September before it was positive or negative? What about corrections occurring during a specific year of the Presidential Cycle or the third phase of the moon? What about corrections during low interest rates or during wartime or when the economy is growing sub-3 percent or when a correction originates before earnings season or after the series finale of True Blood? WHAT DOES THE GODDAMN DATA SAY?

6. Levels: Everyone has their level where the selling will stop. Moving averages, prior support lines, specific times of the month, events or catalysts to come that could arrest the decline – even if you know you’re making it up, you still have one in your head. And you’re very likely to share it as though it’s a matter of fact, despite your awareness that it is not.

7. Fundamentalists will believe in technical analysis. But only temporarily. You’ll hear people who analyze balance sheets and income statements start to use the term “oversold” not understanding that they’re accidentally referring to RSI data, something you couldn’t pay them to pay attention to during a market uptrend. There are no atheists in a foxhole and there are no pure fundamentals guys in a correction. Believe me, they’re all looking at the charts. Even Bruce Berkowitz.

8. Flip-floppers. Forceful opinions will change by the day – by the hour if technical analysis is involved. Brooding bears during a morning gap-down become relieved bulls later in the afternoon as the algos outplay everyone and drive the action at the margins. Mood swings will dictate market postures and the daily back-and-forth will be hilarious. So help me god, before this is over you will see a man tweeting about 1987 one moment, and then 1982 a few hours later.

9. Exacerbation: What role does the media play in all of this? Great question. Their role is to squirt kerosene on the campfire and really stoke the flames of fear. It’s what they do best and it’s how they keep you tuned in. No reason to hate or be mad – it’s just how it is (I wrote a book on this stuff, trust me). As my friend Phil Pearlman says, “the higher the Vix, the higher the clicks.” Volatility equals ratings and pageviews – let ’em have it. There’s been a volatility drought for most of the last two years. This is an oasis in the desert.

10. Scary sh*t will be heavily retweeted. This is a guarantee – the scarier headlines will have the most RTs. Human beings have evolved, over the course of hundreds of thousands of years, through the natural selection of specific traits that aid in survival. One of those traits is alarmism. The Neoliths who saw something and said something when relaying risks back to the tribe were the ones who lived longed enough to pass on their genes. The ones who kept quiet about terrifying stuff like volcanoes and sexually aggressive wooly mammoths didn’t pass on their DNA at all, they were melted alive or mammoth-raped. When you think about it, what we are, as a species, is the distillation of the loudest screamers and most easily frightened people who ever lived. Of course we’re gonna retweet Zero Hedge and John Mauldin links!

Being aware that this is the social media environment you’re going to be in for now is half the battle. The other half is being able to contextualize it without falling into the rabbit hole entirely.

So keep your head, keep your sense of humor, and keep your time on Correction Twitter to an absolute minimum when possible.

This post was originally published on October 14, 2015

Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer.

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