Noah Smith, How Zero Hedge makes your money vanish, here. Like the deconstruction of Tyler Durden for people who didn’t know he/they talks his/their book, incessantly. But it is obvious to all but fools that he is talking his book. So then Zero Hedge is like a Nigerian letter scammer looking to eliminate the false positives, sort of reminds me of Cormac Herley, Why do Nigerian Scammers Say They are from Nigeria? moved here. Seems to me that some Zero Hedge postings are more valuable than just entertainment/ice cream for the 99% while the Zero Hedge machine digests/processes their target audience of 1% victims. For one example, Zero Hedge was among the first to place the London Whale positions in the CDX standard tranches, here, certainly before ft.com/Alphaville. Not that you are gong to generate Alpha off that information, but it is worth more than just entertainment. Maybe the argument is that you have to keep both the clued in as well as the clueless in the audience in order not to scare the clueless away?
This is sort of the Facebook problem writ small. Think about it.
Which brings me to the website Zero Hedge.
Zero Hedge is a financial news website. The writers all write under the pseudonym of “Tyler Durden”, Brad Pitt’s character from Fight Club. Each post comes with a little black and white icon of Brad Pitt’s head. On Zero Hedge you can read news, rumors, facts, figures, off-the-cuff analysis, and political screeds (usually anti-Obama, anti-government, and pro-hard money). On the sidebars, you can click on ads for online brokerages, gold collectibles, and The Economist.
The site is a big fat hoax. And if you read it for anything other than amusement, you’re almost certainly a big fat sucker.
That’s a bold claim! Why do I make this claim? Well, in one sense, all financial news is a hoax. Financial news, by definition, is public information – if you’ve read it, you can bet that thousands of other people have too. That means that if the market is anywhere close to being efficient, any information in any article you read will already have been incorporated into the price of financial assets. Reading or watching public information should not, in theory, give you any “alpha”.