The Australian market is defying the US lead for the second day in a row on the back of a surge in the price of iron ore.
Likely also the market is rallying because it has been in selling mode for some time now and US markets are only really just getting started with last night’s breach of the 200 day moving average for the S&P 500.
But Josh Brown, investment manager and noted Twitterati @reformedbroker, has a 10 step guide to surviving this market funk in the US which is still applicable to an Australian audience already buffeted by market ructions.
Brown warns of the perils of being caught in a twitter trap “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.”
Sagely he says “this thing (people losing the run of themselves) 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.”
Here are his 10 notable features of Twitter, and its users, during this correction.
1. Chest-beating: Brown says there will be a lot of “I told you so” but without saying the words.
2. Retroactive top-calls: Ah yes, closely related to the I told you so Brown says Tweeters will “hunt down” any tweets that can be remotely cast as predictive of the move
3. Lashing out: “People are losing money right now. It’s not permanent unless they’ve been running around like idiots with their portfolio.” But that doesn’t mean they won’t feel the stress so they might be a bit more twitchy than usual.
4. Misattribution about the cause of the correction: Theories abound – ignore them.
5. An avalanche of statistics: Avoid this one if you can.
Lies, damned lies and statistics – like misattributon Brown also says avoid these where you can. Does it really matter “What’s the average depth or duration of corrections? What’s the typical slope of the descent, or the typical rate of descent?”
6. Levels: Where will the fall stop? How high will the bounce go? Brown is leery of this type of tweet but reckons you’ll share it anyway.
7. Fundamentalists will believe in technical analysis: Everyone is a chartist when they have no idea – Brown says stick to your knitting.
8. Flip-floppers: Jumping at shadows or mini-market moves Brown says “Brooding bears during a morning gap-down come relieved bulls later in the afternoon as the algos outplay everyone and drive the action at the margins.”
9. Exacerbation: What role does the media play in all of this? Brown says that the media’s role “is to squirt kerosene on the campfire and really stoke the flames of fear.” Not BI though.
10. Scary sh*t will be heavily retweeted: Isn’t that what Twitter is for?
Brown says, “When you think about, 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!”
But the best part of Brown’s roadmap is his entreaty not to fall down the rabbit hole that Twitter can become at times like these.
“Keep your head, keep your sense of humor, and keep your time on Correction Twitter to an absolute minimum when possible.”