Contrarians betting against the herd have often been very successful. For example, John Paulson and Michael Burry made billions by shorting CDOs that lead to the 2008 crisis. The movie "The Big Short" is an Ok dramatization of how it all unfolded.
Markets can stay irrational longer than you can stay solvent... We just rarely present those who became insolvent unless it was massive screwup. And even then, well they don't get movies.
My 2 cents TLDR: seize opportunity but based on sound analysis and caution, not blind optimism. I think they are saying something of the effect of:
1. The short trade (The Big Short or similar trades during the housing bubble) happened during a period of market euphoria. I.e. when most investors were irrationally confident and greedy.
2. Instead of sitting out or being fearful (as Buffett's original advice would suggest), the people who shorted the market took an aggressive position. They were indeed "greedy" in the sense of seeking profit, but they did so with deep awareness of the systemic risk that others were ignoring.
We analyzed hundreds of stock recommendation videos from finance YouTubers (aka finfluencers) and backtested the results. Turns out, doing the opposite of what they say—literally inverting the advice—beat the S&P 500 by over +6.8% in annual returns (but with higher volatility).
Influencers often market things and make money off things other than being good at [name a skill or thing they are influencing]. For finance previous work has shown that financial influencers are are worse advice givers are actually the more popular ones.
When you really think about it. If these people were really good, would they need to be influencers? Wouldn't they actually be spending all of their time managing either their own money or some other big money fund?
So on average they probably are not that good as they really need to do all the marketing. Which is actually quite big time commitment.
Your thought is that monetization often depends more on visibility than performance and that getting views on any platform these days also requires marketing? Fair point.
It was my investment thesis that HN comments reflected the trading activities of a meaningfully large cohort of non-toxic trades-- people with disposable income and opinions that exceeded their actual knowledge. Bored know it all googlers day trading from their desks, and as a result there might be profit to be had trading against it because not only were they frequently just wrong when they were right the market prices exaggerated things.
I consistently made good profits from it, but I had no real basis for setting trade sizes which I was never happy with-- if I could actually see commenters orderflow I could clone their sizes with scaling, but obviously I can't. I didn't resume the activity after the 2020 market turmoil particularly as I had a lot less time available and didn't have a good way to fully automate the practice.
Contrarians betting against the herd have often been very successful. For example, John Paulson and Michael Burry made billions by shorting CDOs that lead to the 2008 crisis. The movie "The Big Short" is an Ok dramatization of how it all unfolded.
Same herd mentality, different soapbox.
I wonder if it is because we hear about people who are successful betting against the herd.
Markets can stay irrational longer than you can stay solvent... We just rarely present those who became insolvent unless it was massive screwup. And even then, well they don't get movies.
This is certainly part of it. The survivors write the narrative.
Are they actually contrarians or are they people who were looking deeply into the topic and noticed both a bubble and an opportunity?
"Be greedy when others are fearful, and fearful when others are greedy"???
I'd say the short was more like "when others are greedy, be greedy and aware".
Buying the assets once the markets had already collapsed, and they were undervalued, would have been more of a Warren Buffet thing to do.
what does it mean to be aware?
My 2 cents TLDR: seize opportunity but based on sound analysis and caution, not blind optimism. I think they are saying something of the effect of:
1. The short trade (The Big Short or similar trades during the housing bubble) happened during a period of market euphoria. I.e. when most investors were irrationally confident and greedy.
2. Instead of sitting out or being fearful (as Buffett's original advice would suggest), the people who shorted the market took an aggressive position. They were indeed "greedy" in the sense of seeking profit, but they did so with deep awareness of the systemic risk that others were ignoring.
Precisely my take, thanks for the elaboration!
We analyzed hundreds of stock recommendation videos from finance YouTubers (aka finfluencers) and backtested the results. Turns out, doing the opposite of what they say—literally inverting the advice—beat the S&P 500 by over +6.8% in annual returns (but with higher volatility).
Even just in name, "finance influencer" sounds very similar to "market manipulator".
Influencers often market things and make money off things other than being good at [name a skill or thing they are influencing]. For finance previous work has shown that financial influencers are are worse advice givers are actually the more popular ones.
Not necessarily... Depends on what they peddle, but could be just your motivational speaker, self-help or course grifter.
Studies have been done that show that. Of course, if it is an old study, results need to be run on new data.
how does that compare to betting against Jim Cramer?
I haven't benchmarked inverse Cramer recently, but last I heard not too well: https://www.reddit.com/r/wallstreetbets/comments/187612o/inv...
Anyone know how it is doing recently?
I've thought inverse-Cramer was doomed ever since he shouted it out on twitter. Kind of short-circuits the whole thing.
Yep! Markets are theoretically efficient.
YouTube video about the financial influencer research: https://youtu.be/A8TD6Oage4E?si=m3yuqIO0pvivSRa2
Did it beat....doing literally nothing?
https://www.cnbc.com/2025/04/05/heres-why-dead-investors-out...
Investing in the QQQ or S&P 500 can often be a better idea than doing literally nothing.
There is a lot of psychology in the reasons why.
When you really think about it. If these people were really good, would they need to be influencers? Wouldn't they actually be spending all of their time managing either their own money or some other big money fund?
So on average they probably are not that good as they really need to do all the marketing. Which is actually quite big time commitment.
Your thought is that monetization often depends more on visibility than performance and that getting views on any platform these days also requires marketing? Fair point.
No idea about any of these channels but there are some on YT that give good global macro coverage:
- Vix, IV vs realized/historical
- option flows
- market makers gex, skews, (1st 3 probably best src of edge)
- /NQ and /ES trading volume,
- bond yld curve, credit spreads, how much prim dealers hold after long auctions, PBC holdings
- metals
- geopolitical: Europe / middle East / China/ South America
- energy
- currency
- commodity prompt spreads, contangos
Like anything, I am sure there is good work out there. The keys is properly identifying which are good and which are bad.
Betting against HN posters views has also been extremely lucrative.
I know that is probably sarcasm, but betting against things people are sharing might be interesting.
It was my investment thesis that HN comments reflected the trading activities of a meaningfully large cohort of non-toxic trades-- people with disposable income and opinions that exceeded their actual knowledge. Bored know it all googlers day trading from their desks, and as a result there might be profit to be had trading against it because not only were they frequently just wrong when they were right the market prices exaggerated things.
I consistently made good profits from it, but I had no real basis for setting trade sizes which I was never happy with-- if I could actually see commenters orderflow I could clone their sizes with scaling, but obviously I can't. I didn't resume the activity after the 2020 market turmoil particularly as I had a lot less time available and didn't have a good way to fully automate the practice.
That is so interesting! I wish you would write something up about it :) I guess that is why big companies mine social media data