The meme of the demise of PCs and MSFT has been all over the news for years now.
I have put together relative performance charts (stock market represented by VTI ETF compared to MSFT) and a few quotes from Barry Ritholtz on Microsoft.
Barry has got 137k+ subscribers and he has a strong (bearish) opinion on Microsoft. Can he influence the sentiment? Apple, Nokia, Blackberry tablets… and the digital revolution in general attract so much of attention these days and I thought why not explore how opinion makers influence the market. This is not an attempt to pick on Mr. Ritholtz whom I deeply respect for his articles on investment strategy and thought process. Believe his intentions are good. On the contrary, I think my exercise illustrates his points (to the extent that my attempt is rigorous, which of course it is not):
- We selectively perceive what agrees with our pre-existing expectations, and ignore things that disagree with our beliefs. (You won't find an opinion supporting investment thesis on MSFT on Barry's blog.)
- Story-telling is how Humans evolved to share information (Pre-writing). Thus, we are vulnerable to anecdotes that mislead or present false conclusions unsupported by data. (Think the "demise of PCs" story)
- Stock picking is for fun. Asset allocation is for making money over the long haul.
Hope I have not 'cherry picked' the tweets and charts below (of course the pitfalls such as above are very relevant to me. Especially for the facts of 1) me being long MSFT and 2) the recent surge of its price!). I tried and chose the tweets with strong negative connotation ("Microsoft has failed" or written in capitalized letters) and measured performance for fixed periods of time after the tweets (30-40 days). Sure enough this is not a study of causation between the tweets of Mr. Ritholtz and MSFT stock performance. However I am curious to see what others think and how this method might be improved.
Enough with the context. First let's listen to what Mr. Market has been telling us since October 2007 market peak. And this clearly is not a story of any demise.
MSFT,VTI: PerfChart - StockCharts.com - Free Charts
Here are some tweets and charts capturing performance of the MSFT stock shortly thereafter.
Barry has got 137k+ subscribers and he has a strong (bearish) opinion on Microsoft. Can he influence the sentiment?
Disclosure: I am long MSFT.