Good investors are always trying to evaluate investor sentiment. Most successful investors use sentiment as a contra indicator. Thanksgiving dinner conversations and Uber drivers are my contra indicators. I spent my Thanksgiving with my family in Dallas. While most of our guests drove themselves to dinner like most good Texans do. Uber was used by my California based family. This week I share my Thanksgiving and Uber conversations and my conclusions from each.
I have worked in the financial services industry since 1987. Initially my family believed my job provided me a crystal ball into the direction of the stock market. I was flattered when they asked and I provided them the company line on where the market was going. It made me feel smart but when my opinions were incorrect my family members remembered. Eventually my Thanksgiving response became that I didn’t know where the market was headed. The blind love of family members thought their San Francisco based family member must know. Time and a volatile market have changed their opinion. This year no one asked me market questions. What is the tell? I think the sentiment tell is that most investors have grown weary of the fantasy that the stock market can make them wealthy. My work is done here.
Ride sharing firms have displaced taxis but their drivers still have investment opinions based on discussions they have or overhear from their riders. The riders are confident to share their ideas with a stranger they most likely will never see again. Unfortunately the drivers will share the opinions they hear with their new passengers. My thought is that if passengers and drivers can rate each other maybe we ought to add a rating category of investment ideas to the mix. My drivers are still bullish. That concerns me.
While I am a social media addict I don’t use it to find investment ideas. A book by Seth Godin shares an idea that that has helped me. His idea is termed the Minimum Viable Audience (MVA), Seth believes that mainstream advertising and social media identify the opinion of the masses but misses the opinion of your top prospects and clients (MVA). Mainstream media has proven to be a good contra indicator but MVAs can help. Our challenge is to define the ten members we want to include in our MVA.
Now that Bloomberg has purchased Business Week their magazine covers can’t help us. We are left with Thanksgiving and Uber drivers to show to show us what to avoid.