NEW YORK: As writer Theodore Sturgeon observed, 90 per cent of science fiction is crap, but then again 90pc everything is crap.

In the world of online investment opinions, Sturgeon was an optimist.

Not all that long ago, the perspectives of individual amateur investors and professional ones, too, were for the most part unknown. Most market participants had no way to share their views about individual companies, interest rates, the economy, Federal Reserve policy or much of anything else. They owned whatever investments they owned, stocks and interest rates went up and down, and that was the end of it.

Their views were of course reflected in the trading of what they bought or sold. Price was the final arbiter of any debate. It is still thus, now as it was then, that price settles all debates over the long run.

But in the short term, not so much. When it comes to investing, the Internet has created a huge assembly of commentary of dubious value. There is gold among the dross, but for the most part it is a cacophony of cranks and gurus. I choose guru to pay homage to Peter Drucker, who observed: “We use the word ‘guru’ because ‘charlatan’ is too long to fit into a headline.”

Today, any idiot with an ETrade account has instant access to a megaphone to broadcast his own imbecility. Amusing as so much of this nonsense is, to the uninitiated or easily influenced, it is dangerous.

It wasn’t always this way. A few decades ago, a handful of media outlets covered investing. They had the power to quote analysts, to drive the agenda and to anoint stars: a few well-known monthlies; Barron’s on the weekend; and, of course, the Wall Street Journal. Sure, the world was just as full of money-losing cranks and conspiracy-minded crazies. You just didn’t have access to the full flower of their lunacy.

You can trace precisely when the gatekeepers — mainstream media, Wall Street and the government — began to lose control to the mid-1990s. That was when the Yahoo Stock Message Boards launched and quickly found an audience. At the time, such stocks as Iomega, Boston Chicken, C-Cube Microsystems or Galoob Toys were not exactly media or Wall Street darlings. Instead they found expression among the unwashed masses. Driven in large part by the message-board community, some companies had epic runs. Iomega was one, and the boards helping drive the stock to a $6 billion valuation in 1998, before it ultimately collapsed. (It was bought by EMC for $213 million in June 2008.)

Those days seem quaint.

The message boards made it clear there was an appetite for a more diverse set of ideas and opinions. Truth be told, the media had not done an especially good job of informing the public of the nuances of markets and investing. That failure made them ripe for disruption. Blogs provide just that, a digital assault on the gatekeepers.

Next came a slew of social-media entities — Facebook, Twitter, LinkedIn — providing an ever-larger platform for ever more diverse (and ever less rational) opinions. But as Sturgeon’s revelation accurately observes, if “ninety per cent of everything is crap,” then so too is the never-ending stream of poorly reasoned comments on investing, in 140 characters or less.

By arrangement with Washington Post-Bloomberg News Service

Published in Dawn, August 2nd, 2015

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