Fantastic article.

The incentives of the monopoly internet platforms inevitably drive their algos to foment polarisation. Optimising for engagement embeds it in the math.

That’s a core feature of the political economy we live in.

Invest accordingly. https://www.technologyreview.com/2018/08/14/240325/how-social-media-took-us-from-tahrir-square-to-donald-trump/

In other words, social media:

1) speeds everything up
2) dumbs everything down

So the wavelength of consensus narratives in the market should shorten, even as the amplitude increases.

This, combined with ever less frictional access to markets via aggregator platforms, should result in greater short term momentum effects, and increased volatility.

It will be interesting to see if there is a polarisation impact and increasing de-coherence in markets that results that is analogous to the polarisation and fractionalisation we see in politics.

As long as money stays super easy the forcing function of commercial viability is deferred.

This allows conflicting polarised views of investments to simultaneously persist for longer without a reality-based “true-up”

This makes the price formation process more of a conflict between competing mobs with different interpretations of the Rorschach test that is an investment’s “story” rather than its operational facts.

That’s what 0% rates do, they remove accountability by making the indefinite future as important as the visible near present.

No wonder “growth” is killing “value.”

And it makes me wonder about whether all the bloviation on fintwit about “low time preference” as an investing virtue may be overstated.

Once rates tick up and inflation starts to force back in some “time preference” we might see some pretty different dynamics in the market.

In the meantime it should surprise nobody that:

social media polarisation +
low rates and easy money +
low friction mass access to trading

= markets as pure narrative beauty contest

The polarising dynamic should also drive increasing fragmentation, with people more easily opting out into alternatives, like a pure crypto economy, gold buggery, etc.

Those markets are small relative to the big “mainstream”, but this seems like it will be a persistent tailwind.