“Croesesus crossing the Halys will destroy a great empire”
– Delphic Oracle, quoted in Niederhoffer’s Education of a Speculator
The beauty of the above quote is that it sounds great but never really specifies which empire will fall.
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While Victor Niederhoffer might ultimately be remembered for blowing up spectacularly on multiple occasions, he wrote a great book back in the 90’s called The Education of a Speculator.
In Chapter Three, entitled Delphic Oracles and Science, Niederhoffer provides a brilliant and scathing critique of stock market gurus, comparing them to the Oracles of Ancient Greece. If you are a student of market predictions, it is a must read.
Niederhoffer describes in explicit detail how market prognosticators from newsletter writers to government leaders including the Fed manipulate how they are percieved by utilizing ambiguous predictions, selective attention, revisionist history and obscure language.
Many of the best at this, of course, are veiwed as brilliant gurus and get paid handsomely even as their true track record remains suspect. As well, the crowd hangs on their every utterance…
The bottom line is, these guys are a scam. They use every rhetorical trick to convince others they add value and make money off the promotion of such misperception. They exploit the gullible media and consumers hungry for guidance and confirmation.
Killing the False Market Guru Once and for All
StockTwits has the potential to kill the false market guru once and for all. It limits takes to 140 characters, logs all tweets and organizes them by author so they can be easily referenced and provides a laser sharp community that scrutinizes and vets, scrutinizes and vets.
And what’s more, it provides an even playing field where the guys who are truly awesome at making money in markets can express themselves, be heard and earn a reputation based on relating positive alpha rather than one’s adeptness at some Delphic sleight of tongue…