If you're a big Twitter user, and you've been long $TWTR because of that, think about the availability heuristic you're face to face with.I think of it like this. For most of us on here, we search for and find quality content and people throughout finance twitter. The experience is enjoyable and the fact we all like twitter among a group using twitter leads to a host of further psychological biases.
— Stefan Cheplick (@scheplick) Jul. 29 at 09:53 AM
However, as Twitter shares have shown to us, most normal people aren't that consumed by it and use it in a totally different way. The numbers are awful and it makes no sense to many of us. You can check the stocktwits stream and notice handfuls of people 'ready to build positions' daily.
Before we do that, we've got to understand how rampant this bias is. Has it blinded a large portion of the investment community? Despite the notable issues (like pot head management) the dip buying has been endless since the stock's peak in the 50s. It's safe to say it has. Has it run it's course? Great question, who knows.
We have no other way to truly measure this bias other than by observing sentiment. Also, we can look to the technicals to determine the potential damage. James Bartelloni (@BartsCharts) notes many signals in his method are pointing to Twitter being a 10 dollar stock.
— James Bartelloni (@BartsCharts) August 4, 2015
We've no way of knowing if it gets there, but shares are probably not a buy and hold right now, given it just broke down from a 1 year 20 point range. Someday, this action will be a case study in a behavioral finance book. We've got to learn all we can from it in real time.
Trade 'em well!
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