In its 10th annual "Reasons to Love NY" article, New York magazine listed as #12, "Because a Stuyvesant Senior Made Millions Picking Stocks."
http://nymag.com/news/articles/reasonstoloveny/2014/mohammed-islam-stock-trading/
The fawning piece provided a glimpse into the supposed celebrity lifestyle of Mohammed Islam ("a cherubic senior with a goatee and slight faux-hawk") and his two friends, Damir Tulemaganbetov ("The son of a Kazakh oligarch ... tall, slim, and cocky, like a cigarette wearing a fedora") and Patrick Trablusi ("a more serious Chuck Bass").
It's hilarious, these banal descriptions normally reserved for celebrity. And why the celebrity? Because someone thought these three had made $72M on the stock market while seniors at Stuyvesant High School and that they were going to start their hedge fund when they turned 18. What NY Mag loves about NY is rich people doing rich people things that poor people aspire to.
Obviously, the whole thing was a prank played by these kids on the New York reporter Jessica Pressler (and the New York Post, which also picked up the story).
http://observer.com/2014/12/exclusive-new-york-mags-boy-genius-investor-made-it-all-up/
But how does an established magazine with a credentialed factchecking department allowed itself to print a completely bullshit story? And what it can teach us about investing?
First the obvious ...
People want to believe investing is easy money (and other fairy tales).
Magazines have to fill space with stories in order to sell ads
Greed breeds stupidity.
There's a whole segment of the biz-fo-tainment industry for puff pieces about rich people. Towit: The article's author is leaving NY Mag to join Bloomberg's "investigative unit" to write "long-form stories about financial personalities and the culture of wealth and money."
... but the prestige is how the story got picked up in the first place, as it seems most compelling from an investor's perspective. As per Ken Kurson's Q&A between him and the kids ...
"Observer: What was your first contact with the New York magazine reporter?"
"Mohammed Islam: My friend’s father worked at New York magazine and he had the reporter contact me. Then she [Jessica Pressler] called me."
... it seems to me that the credibility provided by a weak connection (so-and-so's father) was apparently strong enough to short circuit a reporter's natural cynicism (if she had any) and the established process to keep bullshit out of the magazine.
Some kind of cognitive bias was at work here, though its name escapes me, but I'm reminded of the saying: "beware the strength of weak connections." These connections enable us to provide trust where none is due. And all commerce is at some level based on trust and confidence in the integrity of the system.
Some of the things investors do based on this trust from weak connections includes ...
Some kind of cognitive bias was at work here, though its name escapes me, but I'm reminded of the saying: "beware the strength of weak connections." These connections enable us to provide trust where none is due. And all commerce is at some level based on trust and confidence in the integrity of the system.
Some of the things investors do based on this trust from weak connections includes ...
looking to see who else own their stocks as a sign of confidence in their decisions
talking to analysts because of the "pedigree" of their education of their authority from working at an investment bank
believing that a "diversified" portfolio contains non-correlated entities because it's called "diversified" by some "expert"
... but truly, the only thing one should really trust, at the baseline, is that the entire financial industry is set up to separate a person from their money and collect a fee for doing so. And the media is an enabling factor in the process through its authority and credibility shaping mechanisms. It thrives on weak connections.
So what's an investor to do? The same as what this writer should have done, which is seek the facts, and knowing them, make decisions that provide other people with opportunities to learn more about the companies they invest in and perhaps even about themselves.
So what's an investor to do? The same as what this writer should have done, which is seek the facts, and knowing them, make decisions that provide other people with opportunities to learn more about the companies they invest in and perhaps even about themselves.
