Be afraid of blogs, be very afraid...

Discussion in 'Professional Trading' started by retaildaytrader, Jul 7, 2010.

  1. (I cut and pasted this post from a reply I did in another thread. I thought it would be good as a stand alone post so I reposted it here)

    **All blogs** are completely and utterly useless and let me go into this categorically.:

    #1- You do not know who is behind them. They could be a young guy in high school or an old guy in a wheelchair. They could be convicts or saints. You dont know who the authors or commenters are from a hole in the wall.

    There is oftentimes talk about "credibility" and I have to laugh. There are people out there that would actually trust strangers who they only know from some sentences typed on the internet??? People who believe there is "credibility" on the internet deserve to lose their cash.

    #2- Most bloggers oftentimes have an angle. They want to make money eventually from the blog in some way, shape or form. Some of them say they manage other people's money in order to encourage people to send them money, others do it through ads and some others eventually want to put up a subscription site. In any event, the blogger oftentimes has an angle to enrich themselves, but not their readers. Therefore bad calls or mistakes they made are oftentimes downplayed or sometimes those posts are simply erased. One common tactic is to place blame on politicians in an attempt to steer blame away from themselves for a bad call. In any event, most of these bloggers act like Wall Street is out to get everyone and they are there to get back at them.

    On the other hand, good calls the bloggers make are oftentimes up-played. You oftentimes see the blogger make references back to their good calls with no mention of the 10 other bad calls they made. Sometimes the bloggers may even have a "tag cloud" referencing back to the good calls they made while the bad calls dont get any tags.

    #3- Double-talk- The art of double talk is alive and well on financial blogs. Oftentimes bloggers will talk in such a way that if the market goes either way then there is some truth to what they said earlier. They will say something like "The market is recovering, but its a weak recovery." So if the market goes higher, then they come back and say they called it, but if it goes lower they say how they said it was a weak recovery and probably wont hold. When this is pointed out to the blogger, they oftentimes come back saying that they worded that way for liability reasons as they do not want anyone losing money.

    #4- The comments section is usually where the real crooks hang out. Usually, the commenters seem like good people and they want to go beyond the comments section to talk on the phone or even meet in real life. Their aim is usually to find a way to wiggle someone's cash out of their hands. What they look to find is the 65+ older set with a huge nestegg.

    I talked about the off-Wall Street fund managers once and these are people who informally manage other people's money. For example, my father, God rest his soul, gave money to a gut to manage. That guy never worked on Wall Street but just had a reputation in the community for getting things right. (my father lost all the cash that was given to that man BTW). I know of a woman nurse who lost $250k with some odd character who somehow convinced her that he could trade. That character never worked at any firms or funds. Then there was this guy I know who worked in a non-management position at an insurance company and he lost about $25k with the woman he trusted to trade the cash.

    You see, people have been trying to get other people's money to trade since trading began over a 100 years or so back. Now these off-Wall Street "traders" are back, but they have the internet this time. It used to be through word of mouth and cold calling, but now they can leverage the internet to get your money to trade. They form a relationship with you through their blog and you feel like you can trust them because of their kind supporting words...

    #5- Good traders, funds and firms would not give away how they do business just how Coke isnt going to give you their secret formula. A good trader will never come out publicly and tell you how they do their business. So if you are reading a strategy on a blog then chances are it will not work. No one is going to publish a strategy that is working for them. No one is going to let you in on the inner workings of their profitable enterprise.

    #6- Blogs oftentimes push technical analysis and theories such as the Elliott Wave. It all looks good on paper, but the truth is that every technical pattern has a probability behind it. Usually that probability gives you only slightly better odds then the coin flip. However, technical analysis is most always promulgated as the be all and end all. There is no blog out there that discloses these are just probability studies. When the market goes against their technical theory, who is blamed? It must be Obama or Bernanke who is manipulating the market and you are to blame the politicians for the pattern not working.

    So your best bet is to study how real traders did it in the popular trading books. There are a few journalists (one particular one comes to mind who is on this board) that have interviewed and researched many of the better traders out there. I think studying them is probably your best bet.

    However, you should not read any of these blogs. You should especially never trust your money with any of the bloggers without complete due diligence conducted by an independent party. Even good due diligence, however, can still not be good enough. I bet you would be donating your money to them if you wired them some to play with. I have not seen any blog yet where you can consistently make profits off of and the bloggers have too many tricks up their sleaves.

    Maybe you are on these message boards or blogs just for "community". Let me stop you right there. You have to rethink life if this is the way you make your friends. There is something wrong if you need boards and blogs in order to be a part of a "community".

    Its not good to be super paranoid and suspect of the world from day to day, but when it comes to the internet then thats a different story. Be afraid, be very afraid...

    When you see someone else's blog, say thanks, but no thanks. You dont need to lose your cash today...
     
    shihpinlo likes this.
  2. The idea that I would somehow lose money just because I read someone's blog is absurd. If that's really your concern, you need to find something less public to waste your time on.
     
  3. You prefer to listen to CNBC? Subscribe to an expert?

    If you follow a guy behind a blog long enough, you'll know how credible the guy is, and it's ok to follow him if he seems to know what he's doing. But, like all of us, they're human, meaning they don't get it right all the time.

    One guy I follow is Market Owl. He doesn't ask for money.
     
  4. now this is funny.

    One wonders how much "off wall street" money managers have lost relative to "wall street" money managers. Geez, with the CDO debacle alone losing God only knows how many 10's or 100's of BILLIONS, it is no contest.

    How did the wall street sanctioned and hyped internet bubble work out for main street? Oops, that was more billions of "mom and pops" money flushed down the toilet.

    Henry Blogett's stock picks were pure as white snowflakes. Same with the army of swap salesmen who helped to bankrupt municipalities all over the USA. Same with the kindly CDO salesmen, the "auction rate security" salesmen, and all the rest. Their interest and motives where all pure!!

    As to all the "bad" or tainted information, have all the blogs in existence lost more for people than "main stream" sources such as Jim Cramer and CNBC? Of course not.

    The reality is simple:

    If you invest with someone make sure they are registered if required (CTA or RIA), and do it through a managed account that is in your name where only you have access to the cash. Never invest more than you can "afford" to lose and never invest in things you do not understand.

    End of story.
     
  5. A good example is xtrends.

    I love the people who still go to that blog and posts comments like: "atilla please let us know what you think of this rally should I short it.

    Sometimes people deserve to lose all their money...



    ---
    A gripe i have with blogs even the good ones are the unsubstantiated comments they make. You will recognize this: Okay what happens at tops or bottoms. One blog will say tops happen fast, other say slowly. One says tops happen on high volume, others on low volume. The same reasons are used for bottoms. But this is all hearsay. Replace tops and bottoms with descending and ascending triangle and then see if those are bullish or bearish patterns. Few say this, others say that. Then the gripe with H&S, people talking about a H&S before the right shoulder is formed, are you serious...!! This is all FILLER.
     
  6. Ok guys, I am going to debunk each one of your posts one by one. I dont mean to make anyone sound foolish, its not my purpose, but to simply show you where you might be slipping up and going wrong:

    Flawed Thought #1: The idea that I would somehow lose money just because I read someone's blog is absurd.

    You may think and believe you have the common sense to filter out the nonsense, but remember that trading and the markets is a purely mental game. Reading junk will corrupt your thinking just like McDonald's food will corrupt your physical well being. Then there is another psychological aspect behind it. If you spend time doing something, then you reason out in your mind that it must be worthwhile. You spent so much time reading their blog so something on the blog must be worthy of your time.

    I remember my grandmother dieing and she remembered things that had taken place like 50 years ago in vivid detail. You remember everything you see even decades later. The junk you read WILL stay in your mental system for a LONG time. You may not think it will corrupt your thinking, but it will...you are what you read...if you read junk, your mind is junk.

    Would you give your child a rag like the Inquirer to read? Why wouldnt you? Because you dont want that junk corrupting their mind. So if you wouldnt let your own children read it, then why do you read it?

    Flawed Thought #2: If you follow a guy behind a blog long enough, you'll know how credible the guy is, and it's ok to follow him if he seems to know what he's doing.

    Keep in mind what I said in my original post about such concepts as DOUBLE TALK, POINTING OUT GOOD CALLS (WHILE DE-EMPHASIZING or ERASING THE BAD ONES), and BLAMING OTHER INDIVIDUALS FOR BAD CALLS.

    If you follow someone long enough then your mind reasons they are worth following and so they automatically get "credibility" in your eyes. Since you take the time to read it, then it must be worthwhile to read and the author must have "credibility".

    In response to your CNBC comment, as I said in the original post, I would read the popular most often mentioned trading books. I told you about certain journalists who have published interviews of well known traders and so thats what I would follow.

    So if you are not going to get an edge by listening to the guys on CNBC like Bob Pisani who has sat on the floor of the NYSE for 15+ years then how are you going to get an edge reading the junk from a blogger who graduated high school a few years ago and has never met anyone on the floor of the NYSE. Bob will not give you an edge and if he cant then no blogger will...

    Flawed Thought #3: As to all the "bad" or tainted information, have all the blogs in existence lost more for people than "main stream" sources such as Jim Cramer and CNBC?

    You just hit the key phrase which is "in existence". I have seen many blogs go under over the years...what happened? Well, the bloggers do not die that easily or simply vanish...when they no longer get the hits they want or their strategy is not working of getting money from you then they simply hit the "Delete Blog" button and go away. They will have a blog up in the future under a different name with a totally different format.

    The advantage of Jim Cramer is that his record can be researched thanks to the internet. However, that blogger you follow has probably had 3-4 different sites up before the one you are reading and under different names. In a year or so, his blog will go away and then pop up again in another shape or form. Who really knows the true record for that individual?
     
  7. gaj

    gaj

    sorry, not all blogs are useless.

    i've gotten information, setups, etc. which have helped me over time.
     

  8. You're always good for a laugh. That's about it though.
     
  9. DHOHHI

    DHOHHI

    Although some of you post has merit, the above is off the mark. First, there are some blogs that are quite useful. I trade a lot of biotech stocks. I read blogs from time to time. I then digest the bloggers perspective and see how it compares to my beliefs based on my own due diligence. If nothing else the blog can give a trader reason to pause and rethink any trade (long or short).

    As far as expecting to make profits consistently off reading blogs -- anyone who thinks that has no business trading. It's up to each trader to do his/her own homework. And that means reviewing any, and all data, that they feel is pertinent to the possible trade. I certainly don't expect to profit by reading blogs. I, as a trader, have to work at it, like anyone making a living in any other profession.

    Last, you don't "lose your cash today" by reading blogs. If you're any kind of trader you make your own trading decisions and have no one else to blame if a trade goes against you.
     
  10. OP's premise is silly.

    Blogs are just a source of information (and entertainment), no more inherently good or bad, useful or useless than any other piece of information - price charts, PE ratios, macroeconomic data, etc.

    Every now and then you'll find something both useful and interesting.
     
    #10     Jul 7, 2010