Why online propaganda mobs are an investment red flag

  1. WeWrite-down
  2. No deal Brexit is not a hedge fund conspiracy
  3. Europe’s digital infrastructure issue
  4. Let’s give a helping hand to Andrew Yang
  5. Anatomy of a malware scam
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  9. Yesterday, in efficient markets
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  11. The best of Morgan Stanley's Adam Jonas
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  13. Did Beyonce make $300m from Uber's IPO?
  14. Bitcoin is the 10-year Treasury of our time
  15. High resolution music is a solution looking for a problem
  16. Amazon is furious about this negative review
  17. Missing: $500bn of American savings
  18. Blockchain for Brexit: a wonderfully terrible idea
  19. The Bank of Hodlers [sic] (sigh)
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  21. An answer to Mark Cuban's question
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  25. Mensch! Dan McCrum is innocent, ok?
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  27. Davos has produced an amazing new guide on precisely how not to think about risk
  28. When the public relations industry does PR for itself
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  104. Atlas bugged
  105. Inflating inflation
  106. Crypto's most devout believers are suffering a crisis of faith
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  110. Please don't tell individual investors to buy leveraged loans
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  120. “We're very disappointed in you, Spotify”
  121. 'Sex redistribution' and the means of reproduction
  122. Tesla probably needs to raise capital this year
  123. No entitlement crisis in America
  124. Free cash flow to whom?
  125. Hey crypto bros! Journalism ≠ advertising
  126. Human capital and the jobs guarantee
  127. This is a tech bubble, when's the crash?
  128. The magic of adjustments: ebitla-dee-da
  129. FUD, inglorious FUD
  130. A complex analysis reaches same conclusion as simple one: hedge funds suck
  131. The jobs guarantee and human-capital “nationalisation”
  132. These hedge fund numbers can't be right
  133. The Vomiting Camel has escaped from Bitcoin zoo
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  136. No, Facebook should not become a nonprofit
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  138. Immutable ledgers meet European data protection
  139. Amazon is not a bubble
  140. Japan's economic miracle
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  142. Delaware should change its rules to let the light in
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  144. Baby Boomers want your family to finance a larger share of their retirement
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  154. Giving stock away to staff doesn't absolve share buybacks
  155. A penny for Macpherson’s thoughts on the nominal anchor
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Talking up stocks is as old the stock market. So is there really anything new or different in overly-confident stockholders or crypto investors taking to Twitter to talk up their primary investments?

Probably not.

As far back as 1888, the Financial Times came to market with the specific mission of neutralising fake news put out by vested interests. Such reports, the FT claimed, were set out in self-published journals for the sole purpose of pumping up stocks above fair value to the benefit of early adopters or directors and to the detriment of long-term public investors.

As an editorial entitled "Unsavoury promoters" in the March 16, 1888, edition noted:

We think that a man is entitled to be described as an "unsavoury promoter" when he brings out a scheme without taking the pains to make any investigation on the subject, except as to the amount of remuneration for his personal services in the matter. We think that a promoter may be described as "unsavoury" if, being a newspaper proprietor, he lends his columns to the wild schemes of unprincipled adventurers simply because, in one form or another, he is rewarded by a quid pro quo.
We think that "unsavoury promoters" include those editors and proprietors of papers who associate themselves with joint stock enterprises, and regulate their laudation or their censure not by the merits of the schemes, but by the amount of stock n their hands or in the hands, of their nominees, which they desire to unload upon the too confiding public -- who use their journals, not for the protection of the public, but for the forcing of fluctuations in stocks to meet their personal ends as speculators, with an utter disregard of the sufferings of those who lose the differences which they so unscrupulously pocket.
It is one of the objects of the Financial Times to expose and denounce this sort of thing, and ample evidence is in our possession to bring home the charges. Our operations are at present delayed by the difference between evidence which would satisfy any man of business, and the more technical proofs which would be requisite in a court of law, to support a plea of "justification".

So if fake or misleading news put out by conflicted parties is nothing new, perhaps what is new is the counter propaganda deployed (mostly on social media or self-publishing platforms) by stock and crypto devotees for the purposes of neutralising fair criticism.

Question the merits of Tesla -- no matter how logically or fairly -- and as a journalist, analyst or pundit, you will expose yourself to the ire of thousands of ferocious Tesla fanboy Twitter accounts. The same goes for any other faddy corporate stock or crypto coin. See as an example TrollyMcTrollface's analysis of how the Ripple army -- an online collective dedicated to supporting blockchain-payment company Ripple and its related XRP cryptocurrency -- weaponises social media accounts to fend off criticism of their vested interest.

To be fair, sometimes the counter-criticism is just. A fact or a perspective may have been overlooked by the writer who then stands corrected to the benefit of all concerned. As long as the interaction is logical, respectful and informed, it should always be welcomed. And generally is. This is the reason why newspapers print readers' letters pages and why most journalists are encouraged to engage with commenters.

How online propaganda squads work

But the reality of today's counter-criticism is very different. More often than not it is tribal, reactionary, abusive, instinctive and organised (or at the very least organised to look organic). Other times it is unofficially rewarded or encouraged by the companies/ventures in question. Even more frequently, it reveals itself as ignorant of the facts and arguments made in the story (possibly because the arguments were never properly comprehended and/or read at all).

Critics' points are taken out of context or challenged over semantics. A classic technique focuses on tearing-apart simplifications (introduced for narrative structure or broader reader comprehension). These are then weaponised by the counter-critics as evidence of factual error or writer ignorance.

The strategy then turns to outright abuse of the messenger, including ad hominem attacks, personal persecution and the general spreading of misinformation about the author under the seeming principle that if you repeat a lie often enough, it becomes the truth.

The aim ultimately is to silence critics and/or antagonise them enough to ensure they waste as much time as possible correcting falsehoods or misrepresentations of what they actually said than scrutinising the investment. It is a form of de-platforming and burying of uncomfortable truths.

Is regulated communication fake news?

While counter critics might claim they are only mimicking the mainstream media's own "fake news" tactics -- a fair point in some cases -- there is an important distinction to be made in the case of investment promoters/defenders.

The object of the criticism and counter-criticism is not a moral, cultural or political stance about x, y or z -- which may or may not be true depending on the political, moral and ethical predispositions of the critic. In this case the object of criticism is a stock or investment, which can be logically and quantitatively scrutinised on its merits or detriments. That scrutiny and/or promotion is de facto regulated, and cannot be judged to be manipulative under the market abuse regime or else there are consequences.

As it stands the Financial Services and Markets Act of 2000 provides that a person must not, in the course of business, communicate an invitation or inducement to engage in investment activity unless the promotion has been made or approved by an authorised person or it is exempt. There are exemptions for the press but the financial media must still adhere to market abuse regulation and internal codes of contact that demand disclosure of conflicts of interests.

Which begs the question: should regulators be acting in some way to rein in the current pandemic of online investment-focused propaganda mobs who both solicit investors with misinformation and actively act to suppress fair criticism?

It is tempting to answer yes, according to the letter of the law. But the reality is that the costs and complexities involved mean there are better options available.

While it is true that something strange is happening in the world of words, statements and arguments -- in that logic is no longer a dependable commodity to win debates with on social media -- it's arguably not in anyone's interests to over-regulate such mobs or deprive them of their right to misinform.

Instead, their very presence should be considered a financial indicator. A good investment can withstand scrutiny and do so without needing to draw on the services of online cheerleaders. But a brigading mob on social media promoting a venture or a scheme is a clear-cut sign of its inability to gain traction on merits alone.

If and when corporate executives understand this, online propaganda mobs will become corporate liabilities that they themselves will want to regulate and tone down.

Related links:
On the hypothetical eventuality of no more free internet - FT AlphavilleFacebook and the manufacture of consent - FT Alphaville
Why advertising substitution risk is out there - FT Alphaville

  1. WeWrite-down
  2. No deal Brexit is not a hedge fund conspiracy
  3. Europe’s digital infrastructure issue
  4. Let’s give a helping hand to Andrew Yang
  5. Anatomy of a malware scam
  6. ARK Invest’s Tesla model gathers dust
  7. A delirious defence of Uber
  8. WeLiquid: Adam Neumann pockets $700m
  9. Yesterday, in efficient markets
  10. The warm fuzzy feeling of indirectly owning Tencent
  11. The best of Morgan Stanley's Adam Jonas
  12. Apple/Tesla: M&A and heartbreak
  13. Did Beyonce make $300m from Uber's IPO?
  14. Bitcoin is the 10-year Treasury of our time
  15. High resolution music is a solution looking for a problem
  16. Amazon is furious about this negative review
  17. Missing: $500bn of American savings
  18. Blockchain for Brexit: a wonderfully terrible idea
  19. The Bank of Hodlers [sic] (sigh)
  20. Behind the curtain at China Ding Yi Feng
  21. An answer to Mark Cuban's question
  22. Crumbs! It's CRYPTO: the movie!
  23. National Beverage Corp loses its fizz, and its mind
  24. Amazon won't spin-off Amazon Web Services
  25. Mensch! Dan McCrum is innocent, ok?
  26. Europe's $1 trillion tax gap
  27. Davos has produced an amazing new guide on precisely how not to think about risk
  28. When the public relations industry does PR for itself
  29. Who wants to be crippled by student debt?
  30. The bitcoin price is wrong
  31. The warm fuzzy feeling of Goldman debt
  32. “Cryptoassets” are crashing again. Is it time to start calling them cryptoliabilities instead?
  33. Puff the tragic cryptowagon smokes out the Mumsnet demographic
  34. Don't write off the public sector
  35. Initiative Q: an elementary pyramid scheme with grandiose ideas [Update]
  36. Moral investments aren't outperforming
  37. No one is killing it in crypto (not even Woz)
  38. Too smooth: the red flag at Patisserie Valerie which was missed
  39. No, the housing crisis will not be solved by building more homes
  40. Sorry Civil, 'crypto-economics' and 'constitutions' won't save journalism
  41. 'Short-termism' isn't a thing, say Fed economists
  42. Coinbase wants to be “too big to fail”, lol
  43. Regulation and innovation don't have to be enemies
  44. Retailers get so lonely around the holidays
  45. Folli Follie: $1bn of fake sales, and what to learn from the debacle
  46. The new green evangelism
  47. Tilray, how low can it go?
  48. The ICO behind the tragic Everest stunt is now “airdropping” tokens from rockets
  49. Beware the Hindenburg Omen?
  50. The broken conversation about financial regulation
  51. The improbably profitable, loss-making Blue Prism
  52. The EM rout is not made in America
  53. Wages and growth and honestly we just give up
  54. Britain's first blockchain-enabled co-working space isn't blockchain-enabled
  55. There is a FIRE that never goes out
  56. The WeWork Garden of Eden
  57. IQE: lumpy 'Apple' sauce at the pricey Cardiff chip shop
  58. There's only so much a central bank can do alone
  59. Eight questions every first-time buyer should ask
  60. MiFID II: not all doom and gloom
  61. Tesla: getting to Q3 profitability
  62. Turkey contagion fears are overblown [Update]
  63. The chance of an inflation shock may be higher than you think
  64. Sorry Tim, the humanity is not being drained out of music
  65. Digital crop circles
  66. What could go wrong here?
  67. Sirius Minerals: money for a hole in the ground
  68. The Bank of England has a strange idea of what QE achieved
  69. One for the ladies...
  70. 'Of course, many ridiculous papers appeared'
  71. Is a change goin' to come?
  72. The capacity's not there yet (and probably never will be)
  73. Musk and Tesla are not inseparable
  74. Libraries, from Carnegie to Bezos
  75. Crypto & government: from anarchy to amity in the USA
  76. 'I'm sorry Dave, I'm afraid I cannot sanction this Series B round'
  77. RBC, through the FANG barrier
  78. Self-help to buy
  79. CFA: Chartered crypto analysts -- updated
  80. The Netflix dilemma -- updated
  81. Fujitsu's new blockchain offering: really cheap or really expensive?
  82. Nothing But the Shirt on Your Back
  83. Universities of Britain: cosying up to crypto is a bad look
  84. How to make a living in the cult of meritocracy
  85. Spotify: Drake-oil salesmen
  86. Oh, the digital humanity
  87. Sports are not markets, predictions ain't investment
  88. Spot the difference, Steinhoff edition
  89. Larry Robbins, a cautionary tale
  90. The node to serfdom
  91. Carney is down with the crypto kids
  92. Samsonite: inventory, excess baggage, and unresolved questions
  93. It might be a long wait for “the equivalent alternative to ICOs”
  94. Don't blame it on the sunshine
  95. In corporate America, brands develop you
  96. One in ten dollars of US housing were anonymous
  97. Should AT&T worry more about its debt?
  98. Who cares if Elon is incinerating capital?
  99. Let’s not try make 'crypto chicks' a thing
  100. Tokens all the way down
  101. Eight-dimensional chess with Elon Musk
  102. A lopsided trade is a good trade, Italian inflation edition
  103. How to buy Italian fire insurance
  104. Atlas bugged
  105. Inflating inflation
  106. Crypto's most devout believers are suffering a crisis of faith
  107. Plus500: past performance is no guide to the future
  108. Noble rot in a shrinking Harbour
  109. In defence of ticket touts
  110. Please don't tell individual investors to buy leveraged loans
  111. RIB Software: the unicorn rainy-day fund
  112. Retail is not dead
  113. Did Soros really give Tesla a “vote of confidence”?
  114. At a crypto conference in New York, it feels like 2017 all over again
  115. Egregious expectations - Intelsat edition
  116. Bitcoin cash is expanding into the void
  117. Stop getting The Flintstones wrong
  118. Bond investors do not care if Argentina is solvent in 100 years
  119. Ubiquiti Networks: of cash and borrowed time
  120. “We're very disappointed in you, Spotify”
  121. 'Sex redistribution' and the means of reproduction
  122. Tesla probably needs to raise capital this year
  123. No entitlement crisis in America
  124. Free cash flow to whom?
  125. Hey crypto bros! Journalism ≠ advertising
  126. Human capital and the jobs guarantee
  127. This is a tech bubble, when's the crash?
  128. The magic of adjustments: ebitla-dee-da
  129. FUD, inglorious FUD
  130. A complex analysis reaches same conclusion as simple one: hedge funds suck
  131. The jobs guarantee and human-capital “nationalisation”
  132. These hedge fund numbers can't be right
  133. The Vomiting Camel has escaped from Bitcoin zoo
  134. Lies, damn lies, and charticles
  135. The world doesn't need more Elon Musks
  136. No, Facebook should not become a nonprofit
  137. Sell all crypto and abandon all blockchain
  138. Immutable ledgers meet European data protection
  139. Amazon is not a bubble
  140. Japan's economic miracle
  141. Have you ever meta crypto joke you didn't like?
  142. Delaware should change its rules to let the light in
  143. Who needs the labels anyway?
  144. Baby Boomers want your family to finance a larger share of their retirement
  145. No, America would not benefit from authoritarian central planning
  146. No one needs to buy Tesla
  147. How to win a debate in the cult of meritocracy
  148. Steinhoff International and the case of Pepkor Global Sourcing
  149. Sorry Jack, Bitcoin will not become the global currency
  150. The “academic’s cryptocurrency” is an elegant waste of time
  151. Cigarettes are the vice America needs
  152. Well that’s one reason to buy yen…
  153. Musicians, don't just blame the labels for your lack of dough
  154. Giving stock away to staff doesn't absolve share buybacks
  155. A penny for Macpherson’s thoughts on the nominal anchor
  156. Monopoly and its discontents
  157. A State of Mind
  158. America is not the least protectionist country in the world
  159. This is nuts, when does Netflix crash?
  160. No Bloomberg, the world's richest people did not lose $114bn...
  161. Someone is wrong on the internet, government employee pensions and passive investing edition
  162. Someone is wrong on the internet, possibly fragile
  163. Someone is wrong on the internet, consumer financial regulation edition
  164. Someone is wrong on the internet: tontine tokens [Update]
  165. Someone is wrong on the internet, road economics edition
  166. Someone is wrong on the internet, wages and the stock market edition
Copyright The Financial Times Limited 2019. All rights reserved. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.

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