I just saw this comment by Pradeep over on this week's Ticker Sense blogger sentiment poll. (Pradeep has turned his own comment into a post on his blog.) :
Popular blogs may not be the best place to find profitable ideas. This poll has become a good short term contrary indicator. Every time it gets released and shows that the popular bloggers are bearish, the market pops. Ever since it started the popular blogger sentiment has been more or less negative and the market has kept going up.What determines popularity. Bearish blogs are more popular. Blogs which are wrong for over a year are more popular. Blogs which promote conspiracy are more popular. Blogs which offer newsletters are more popular. Blogs good at marketing are more popular. So if you don't want to beat the market just follow the popular blogs!!!
Here's my response:
Pradeep, that's the most ridiculous thing I've read in a very long time. Define popular? I imagine that all the blogs in this poll would fit your definition. Yet, week after week, there's no consensus among these bloggers. So how the hell can "all popular blogs" be contrary indicators and under-performing the market?
Here's this week's poll result, which, once again, shows no consensus:
Now I'm sure some popular bloggers may be contrary indicators but how can they all be if they're not all bullish or bearish at the same time? The thought that you could/should go pick some unpopular blog(s) and you'll magically beat the market seems ludicrous to me. Just like with the popular blogs, you'll get a wide variety of opinions.
P.S. I like that many of the bloggers in the poll have chosen to allow their actual votes to be listed. It's interesting to see which bloggers voted which way. I think this is my third or fourth week in a row voting 'neutral'. Yeah, I know neutral is wimpy but if I have to make a call for 30 days out I'm not saying long with the S&P at or near its upper Bollinger Band and well above its 50 and 200-day moving averages. And I'm certainly not fighting the trend by voting bearish. I might be a bear for about a week but after a quick retracement I'm back to the bull side.
Good points Mike. While we fully realize that publishing who voted how will cause added pressure on the participants to get it right, it only makes the poll more valuable in the long run. The hope is that this will add increased credibility to the poll in that participants will be forced to really think about how they are voting.
And at the end of the day this indicator turns out to be a contrary indicator, it sure beats an indicator that has no reliability at all.
If you ever want to know my opinion of market sentiment, just see one of the Predictive Modeling Posts done just about every weekend.
Generally speaking I don't have enough data to say anything about the blogger sentiment. From looking at years of options data, I can safely say that it's not quite as simple as "play the opposite of sentiment" - even for the "dumb money" that buys equity options.
Barring two bullish readings the sentiment has been bearish since this poll started. That is called consensus.
Tickersense in their selection methodology have chosen these to present popular blogger. Plus it represents the most visited blogs by site visits measures.
The data speaks for itself.
Does this mean unpopular blogs are bullish :-? Or if a popular blog goes into the minority it then becomes unpopular :( But shouldn't the unpopular blogs be popular and getting the most traffic because they have been right about the market :((
The collective opinion is just what it is, an opinion. No doubt over time as more data is added, certain patterns of opinion will exist; there will be bloggers who are good contrarians; while others will be better trend followers.
But, in the case of well defined trends going with the crowd is the way to go - it is only when every Tom, Dick and Harry sings the same tune that it is time to think otherwise. There is still considerable conflict of opinion amongst bloggers (as Trader Mike points out), it is not a clear cut case one way or the other.
I like the fact Ticker Sense has done with publishing sentiment for those bloggers willing to participate. I personally find it hard to be "neutral" given it is unlikely the market will be in the same place 30-days down the road. The 30-day outlook is a little fine for my taste, but since I am bearish over a 3-4 month time frame I have gone with the bearish view over the shorter term.
Trader Mike has given his view as a "neutral", no doubt Carl Futia has a different view as a "bull". Maybe Pradeep should read some of these blogs before making sweeping generalisations.
Best wishes,
Declan
Pradeep,
Apparently we have different definitions of the word 'consensus'. I take it to mean a majority or, as the dictionary states:
So even this weeks poll, which has a lot of bears, has no consensus. The only way to get a majority is to combine two groups, such as "not bullish", "not neutral" or "not bearish". Even if one were to do that, who's to say that the less popular blogs as a group won't break down the exact same way???
My statement is the popular blogs reprsented on Tickersense are good contrary indicator. Since the index started it has been consistantly bearish barring two readings. Look at the markets during that time. So the popular blogger indicator is contrary indicator.
I did not chose those blogs, Tickersense chose them for their "popularity".
Go and see http://bigpicture.typepad.com/
He has in Business Week predictions called for Dow 6800 by year end and has been consistantly wrong on the market for the entire year. It is mid November now, so miracles are still posible.
See http://www.billcara.com/
blog. Day in and day out it is all about , "the market is one huge conspiracy" , "the market is manipulated" and so on.
Both the blogs are extremely popular and I can go on.
I can name names of even those who have in their interviews said that they don't earn living out of their trading but run newsletters. But that would open a can of worms.
The trading blogospere like to have a very cozy relationship, with each one scratching others back, with unwritten rule saying do not point out obvious flaws in logic or thinking or methodology.
I love a good pissing contest in the morning.
;)
Personally I'm still nursing a resentment that they didn't ask me to participate ...
:-"
Pradeep, you're sounding like a conspiracy theorist too! like there's some secret society of stock market bloggers...
now that you've given some specific examples I can't disagree on those two. but I still have issues with your broad statements that ALL popular blogs are contrary indicators and that ALL less popular blogs are out-performers
I do wanna chime in with a note - in general - and individual blogs can wear the shoes if they think they fit.
Generally speaking, bearish blogs are going to have an "edge" when it comes to profitability. Let's face it, bullishness is NOT what people log onto the net to hear! They can hear permabulls all day long on Bubblevision and Bloomers! Reasoned approaches to a year-end prediction, like my note in December '05 that suggested a U.S. stock market year that is somewhat typical and not anything to be especially excited about or afraid of, are BORE-ING! It's much more fun to talk about DOW 7,000 than it is to talk about DOW 12,356.50. But where's the fun and excitement in that? Where's the ENTERTAINMENT in that?
Look at the traffic details for safehaven[dot]com, and then read their general tone, and you'll see what I mean.
This, I think, is human nature and not the fault of the bloggers. Everybody loves a good train wreck. Even though good human-interest stories outnumber deaths and mutilated pets several thousand to one in every major city in the U.S., what comprises the first 15 minutes of the 11 pm newscast?
I meant "bearish blogs are going to have an “edge” when it comes to POPULARITY." Having a senior moment ...