Musings about social media and validity bias

The craving for action is always high; especially when you tune into any of the business channels. The hulabaloo surrounding corporate stories and constant chatter by market experts makes you feel uneasy during both bull and bear markets. In the first case you're scared that the ship might sail off without you and in the latter you're scared the ship will sink taking you down with it. Independent analysis based on rationality can take a serious hit in such cases.

I want to take this further and recount from my experience with social media. Recently, I decided to follow some 'value investors' from India on my twitter page. Needless to say I was hooked onto their tweets and looked forward to their pearls of wisdom. Initially, I did well to chant their mantras (and make mental notes for the future). However, in any discipline there are only a few main ideas. I like this quote I heard somewhere - "Everything that has to be said has already been said." Usually people are only giving their own twists and turns to old ideas. This is not without merit of course, for different people respond differently to different story tellings and most often the most lasting impact of a moral story is when you fail to learn from the core message and it happens to yourself. Experience is the best teacher. But Munger also says that it's better to learn from the history of other people and that this can speed up your learning curve exponentially. This was the sole aim of joining twitter.

But my point in outlining the role of the twitterati is also to suggest that because some people have a lot to say, it can make you feel unaccomplished. This is especially true for twitter. Most people I know make twitter accounts and find it extremely difficult to come up with intelligent things to say in 140 words. More often than not, most of their accounts remain dummies for most periods of time. So taking to twitter with the single minded goal of following people with similar interests and contributing to that circle of interest can be daunting if you don't have much to say yourself, especially when you'd like to grow to become like some of the people you are following.

My feed, for example, is often abuzz with stock ideas from some 'value investors' and although I have no reason to doubt their skill in picking good stock picks (until now at least), I usually feel rather unaccomplished seeing the multitude of companies on which they have things to say. This makes me question my own capacity to evaluate companies on my own.

I think this bias is close to the kind you face when you view business channels. The goal is then to focus more on your own study of annual reports; even if you're a newbie and it takes you more than a couple of days to try and understand a single company. Surely the gurus out there were not nearly as good as they are now. There is value in focusing on your own strengths and waiting for your own 'aha' moment. That's when you must strike with all your might.