Twitter’s IPO makes for great news not because it’s particularly important but because it’s new and in our 24/7 world that counts for more than I think it should. Griping aside, I have to thank The Journal for finding a particularly insightful investment analyst to interview, Deborah Watkins.
Deborah doesn’t appear to have any training, experience, or track record in picking stocks but the reasoning behind her buy rating must have stricken a chord with many institutional investors: “I’m just buying because everybody’s talking about Twitter”
The article goes on to state that, “she’s not worried about price increases; she just wants to stick to her purchasing plan and buy the share immediately, though she hasn’t ruled out selling them quickly if there’s a sharp bump.”
For those that don’t know how this kind of thinking ends, read Charles Mackay’s classic Extraordinary Popular Delusions and the Madness of Crowds. The sections on the stock market only take up about a hundred pages but don’t limit yourself there as the other examples are more likely to surprise you. Mackay says that we’re quick to blame others (government, business, those who offered the opportunity to us) even though we are the ones ultimately responsible for our own choices and the outcomes they generate.
