Twitter comes public tomorrow. I’ve been using the site since 2007 and it’s changed my life. But I’m not buying the stock. It’s just too hard for me to value. I say it’s changed my life, though, because it’s revolutionized the way I collect, assimilate and interact with news and information related to the markets. It’s become invaluable to me as a resource.
Even in terms of anecdotal evidence I find it fascinating and informative. Over the past few days and maybe weeks I’ve found a lot of bullish tweeps (twitter peeps), rather than argue valid points against bearish perspectives, resort to red herrings and ad hominem attacks. (Ironically, in offering stock to the public Twitter has also released a “red herring” of its own).
The common response from bulls online recently to a bearish data point is to ask, “what are your returns this year? Have you missed the rally?” I never studied debate but I know that this is a classic logical fallacy. In order to avoid the real issue you use a red herring to draw attention away from it.
It’s also a way to ridicule the bears which brings me to another logical fallacy: the ad hominem attack. This is merely another way to avoid the real issue at hand by directing attention to the individual who brings it up. Doug Kass, one of the few bearish (and unusually insightful) voices on Twitter, has suffered all kinds of haters and trolls on the site recently. Nearly all of them ignore the trades or ideas he shares and attack him personally, mostly just finding new and creative ways to call him a loser.
Spend anytime on Twitter or StockTwits and you’ll find many more examples of both of these fallacies in the bull/bear debate. They stem from bulls unwillingness to even consider the possibility that stocks may be unattractive at current levels. This closed-mindedness is merely a way for them to avoid “cognitive dissonance” (having to reconcile their position with evidence to the contrary).
All in all, it seems to me both reactions are simply desperate attempts to hold onto an illogical/unsustainable position and potentially serve as terrific contrarian indicators. The psychology of market tops and bottoms are absolutely fascinating to me and these kinds of debates on Twitter only make it more so.
Chart of the Day:
A couple of weeks ago I wrote that investors should pay attention to the MoMo‘s for signs of a stock market top. Today, the major indexes moved higher but these stocks were red across the board. Heads up.