Social media platforms like Facebook and Twitter are built upon the human need of connecting with other human beings, and more importantly, being seen and seeing other human beings. As much as we might deny it, we all enjoy observing and learning from other people, while also receiving attention and positive feedback for our own posting. In some way, this blog post is motivated by a desire to have other people read my thoughts and ideas, while simultaneously having the potential to receive feedback from readers. I blog because I enjoy expressing my ideas and it helps me to formulate clearer ideas, I’ve also received feedback and encouragement along the way that has led me to believe the notion that I really do have something worthwhile to say.
A social investment platform like CEO.ca isn't very different. Most users want to contribute their two cents to the conversation (being seen) about stocks and topics in which they are interested, while also giving a "thumbs up" to other users' comments (seeing others) that they like or find to be of particular interest.
After four years of being a CEO.ca contributor/user, I have noticed a trend that isn't hard to spot; the most bullish chatters who have a tendency to post the most bullish one-sided analysis get the most thumbs up on a regular basis. The most popular stocks/channels regularly degenerate to a popularity contest where a handful of chatters regularly get 10+ thumbs up for every post they make, almost regardless of the actual value of the content in their posts. Social media, and social platforms in general, typically become feedback loops of confirmation bias, with users seeking out content and opinions of those whom they like and agree with the most and avoiding anything that is not to their liking.
I have noticed this theme in my own posting. It's no secret I'm quite bullish (I own shares and Westhaven is an Energy & Gold sponsor) on Westhaven Ventures (TSX-V: WHN) and I post on WHN's CEO.ca channel from time to time. I regularly receive 15+ thumbs up for comments that would be considered to be supportive of a bullish view on Westhaven's stock, whereas any posts that could be considered neutral, or expressing some modicum of caution, receive significantly fewer thumbs up. Hey, I even notice it in my own "thumbs-upping" - I give thumbs ups to stuff that confirms my pre-existing biases and my existing market positions. We are wired this way as humans, and 'liking' stuff that is contrary to our own views or market positioning is unnatural.
Why is this?
The fact of the matter is that we are all biased. All of us either own shares, or we are short shares, or we don't like something about the company in question, or we would like to see the stock drop so we can get in at a lower price, etc. We are all biased, even if we pretend not to be. Of course, there are degrees of bias ranging from enraged crazy bulls who have invested their entire life savings in a single stock and will not permit anything but the most bullish assessments of this stock's prospects, to someone who has absolutely no position and no interest in having a position anytime soon.
Through my experience of trading markets for the last sixteen years I have learned that having a market bias is a dangerous thing. While it's necessary to have some sort of bias, and express that bias in the market via a position in order to eventually profit, you do not have to nail yourself to the wall of being right about this bias (one can also begin to use the word "opinion" to replace bias). In fact, being open minded to receiving new information can allow a market participant to avoid the biggest losses, which in itself is a huge bonus over the long run.
Some important questions that a market participant should consider asking themselves:
- Am I willing to admit being wrong and let go of an opinion if sufficient information presents itself to the contrary of my opinion?
- Am I open to objectively processing information and analysis that is not in alignment with my opinion?
- Do I feel that my ego is being threatened when I begin to consider that I might be wrong about a trade or a market opinion?
One of the signs of market mastery that I have noticed among long-term profitable traders is that they are not concerned or shaken about being wrong, and making a complete 180 degree turn on a market assessment is natural for them. After all, in financial markets we are dealing with extremely complex systems that are being affected by myriad variables all the time. The future is uncertain and markets are constantly in flux, therefore, our views should also be flexible and open to processing information as it becomes available.
Professionals are flexible and constantly open to processing new ideas and information, whereas amateurs become deeply entrenched in their opinions and constantly seek out information and views to confirm their biases and/or market positioning. We see this (confirmation bias) on CEO.ca every single day and it is the biggest threat to making objective, clear-minded decisions in financial markets.
I believe the trick is to notice ones biases and to purposely seek out contrary opinions/analysis from time to time. I am going to have opinions, I have lots of them. However, I am flexible and open to being wrong. I'm wrong a lot and I know that I will be wrong. The key is not allow being wrong from time to time cost me more than I will profit when I am right (I am also right a lot). "Strong opinions, weakly held" is my trading mantra and one that has served me well over time.
“Being wrong is acceptable. But staying wrong is totally unacceptable.” ~ Mark Minnervini
DISCLAIMER: The work included in this article is based on current events, technical charts, company news releases, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The views expressed in this publication and on the EnergyandGold website do not necessarily reflect the views of Energy and Gold Publishing LTD, publisher of EnergyandGold.com. This publication is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Junior resource companies can easily lose 100% of their value so read company profiles on www.SEDAR.com for important risk disclosures. It’s your money and your responsibility.