Reminiscences of a Stock Operator
Chapter 1; page 7; paragraph 2
"I didn’t have a following. ( within the brokerage houses ) I kept my business to myself. It was a one-man business, anyhow. It was my head, wasn’t it? Prices either were going the way I doped them out, without any help from friends or partners, or they were going the other way, and nobody could stop them out of kindness to me. I couldn’t see where I needed to tell my business to anybody else. I’ve got friends, of course, but my business has always been the same—a one-man affair. That is why I have always played a lone hand."
Humans are social animals. They enjoy interacting with other people. That is the reason why Facebook can go from an idea in 2003 to 1.2B users in 2016. The recent political season brought tribalism into the spotlight. Are you a Republican or a Democrat? Mainstream centrists need not enter the conversation.
What does this have to do with trading? Quite a bit actually. Look at the popularity of StockTwits, Seeking Alpha, and other popular investing websites that have a heavy dose of social integrated into them. Trading chat rooms and Twitter add a whole new dimension. Lots of traders spend a lot of time on these sites and in the chat rooms. Are you a Bull or a Bear? blah blah blah. I wont condemn these sites universally because there are kernels of good information to be found, but there are many traps. It is so easy to be sucked into endless debates that neither prove anything nor gain anything either. Its also very easy to be sucked into group think. I discussed in an earlier post how I got sucked into the bear camp earlier this year. It caused me not to trust my bullish charts; It was an expensive lesson.
I could go on and on about the evils of spending a lot of time in these places, but I will jump directly to Livermore's conclusion. Trading is a one-man business. Your trades wont be helped by the opinion of others, but your mindset may well become polluted by them. And, does anyone really care if you are long $FB or $GPRO?
Use the web to seek true knowledge; it can be a useful tool for you. Just remember that trading isnt a social club. Can you imagine a Market Wizard logging into StockTwits to post their latest trade? Can you imagine them wasting even 5 minutes debating their trade with a 43 year old, nameless person that is likely trading a paper account from their Mom's basement? Its silly when you think of it that way.