Social Science

Jared Dillian's picture
Rank: King Kong | 1,779

I don't know much about social science or scientists except for the Charles Murray that I have read, which probably disqualifies me right there.

There is also a Pew Research demographer on Twitter named Conrad Hackett (with the most fitting last name ever). I like infographics, so I check in with him sometimes.

Social science, demography. I think people should spend time thinking about these disciplines and applying them to the market.

Like, what if you could send out a survey to people, asking if they held GDX. Then, you could ask all kinds of interesting follow-up questions. Do you listen to Alex Jones? How many fire extinguishers do you have? Etc. You could probably find out some pretty interesting stuff. Like, when you look at a chart of GDX or GDXSO you know that people own these things, but you don't know the kinds of people that own these things.

Wouldn't that be super useful information?

We do this in the political sphere. We have the Trump voter narrowed down to a gnat's ass. But what about markets? What kind of person owns TSLA? What kind of person owns GE? What kind of person owns ANF or whatever? What if you could make generalizations about these people? Wouldn't it help you make a better-informed decision about whether to own the stock or not?

It might actually have you make worse decisions. Better informed, but worse.

Like, pretend that you are conservative and you find out that TSLA shareholders are liberal. You will think to yourself, "they are all wrong," and you will double down on your short. Which could be costly. Like I said, a better- informed, but worse decision.

But it is true that different people buy different kinds of things. It takes a certain kind of person to get into fluffy growth stocks, especially AMZN. Think of the kind of person that buys AMZN. Then think of the person that buys PHYS. I bet the intersection of the AMZN and PHYS Venn Diagram is the null set.

Most people who like cats do not also like monster trucks. Good information.

I'm actually half-serious. Wouldn't it be fun to start up a research institute on this kind of stuff? Like I said, if they have it for politics, why not markets? People would definitely pay for this information, for sure. Like, if you knew that all those subprime CDO tranches were sitting in Dutch pension funds or wherever you'd probably be more inclined to bet against the housing market.

There is no other reason that people look at the Page 1 holders of a stock. They want to see how smart everyone is.

My wife is texting me cat pictures. I have never been to a monster truck rally. Not a coincidence.

Mod Note (Andy): This post is a reprint from the March 29th edition of Jared's Daily Dirtnap Newsletter. If you'd like to read more, WSO readers qualify for a $100 discount to his Daily Dirtnap daily market newsletter...just email [email protected] and mention "WSO Monkey Discount". You can follow Jared on twitter at @dailydirtnap..

Comments (9)

Apr 11, 2016

nice srsly, don't know where i read this but since Tim Cook of Apple admitted he is gay, more gay are buying AAPL ...go figure

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Apr 12, 2016

Well, while I'm sure this antithesis to efficient markets it's true sometimes, a majority of stocks are owned by institutional holders and they don't care who Tim Cook is fucking (unless it's them, in consideration for inside trade secrets).

Even if you could earn some profit by analyzing the demographics of a particular stock, do you think that investing based on what genre of music a tiny fraction of it's current/ former holders like is going to prove more valuable (provide abnormal returns) than fundamentals?

In short, this is fucking stupid. Go learn some basic market theory before you bring that liberal-arts bullshit in here.

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Apr 12, 2016

Haha, thinking the same as you other guys. Investing in stocks is about cash flows and other value add. That's it. Demographics on who owns a particular stock may help some politicians, but then that would be like a conspiracy or some other form of fraud.

Apr 11, 2016

My welfare-receiving, racist grandpa just told me he hates blacks, and black people love gucci, so he would never EVER buy GUCCI stock.

Yeah real market mover.

Apr 11, 2016

This is a pretty bad idea. If correlation exists due to the security holders biases, then this is already present in the data. Adding another level is redundant and would overstate the correlation.

At a very high level you could argue that understanding the nuances of the correlation can help you break down the security holders into sections/profiles and treat them as separate self-interested entities, reacting differently as info comes to market. I mean, people already do this in a very rudimentary fashion when looking at capital flows. Unless you can do this at an extremely advance level though, the value added is close to zero. At any rate, not worth the investment.

Apr 12, 2016

I have a couple of thoughts on this that I'll break down - I'd be happy to know in any errors in my thinking.

1) Point of understanding who owns what stock is;
i) Provide investment/trading information with some economic worth
ii) Provide general demographic information with no relation to investment/trading (i.e. because it's 'interesting').

2) The majority of market capitalisation of every large stock/bond/FX market in the world (barring like China's stock market) is institutional money.

3) Surveying an institution is not the same as surveying a person, and the decision making process of owning a stock or instrument generally is split across a few different functions (someone says buy, someone actually buys, someone watches to make sure the buying complies with regulations, another watches the technology platform, another watches the people doing their jobs). As a consequence a survey is not going to cut it for any relevant trading information.

Therefore I think this idea is stupid.

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Apr 12, 2016

I would love some extensive polls on sentiment towards Chipotle in response to the viral outbreaks they've had in the past few months. I tend to think people have short memories when it comes to this stuff. Disclosure: I am long and buying under 450.

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Apr 15, 2016

I think this could have some use - if you can find the demographic distribution of ownership for a growth stock and it has been shifting to a higher number of non-professional individuals then that could indicate a speculative bubble.

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Apr 15, 2016
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