Why Do Billionaire Bond Traders Bother to Tweet?

(Bloomberg Opinion) -- Famed bond investor Jeffrey Gundlach has tweeted that he is quitting Twitter. This is the equivalent of promising everyone at the bar that this will be your last round. His account remains active, and all his tweets visible — including the one where he labels the head of French bank Societe Generale SA “moronic.” He has given no extra details on the “suspicious activity” that apparently triggered his desire to close his account. Still, if he does walk away, it would be no bad thing.

It’s hard to really see what the upside is for someone like Gundlach to be so vocal on Twitter. There’s something to be said for the old-school fund manager maxim of: “My performance speaks for itself.” And Gundlach’s performance is comparatively decent. His $47.2 billion DoubleLine Total Return Bond Fund returned 1.8 percent last year, the best of the 10 largest actively managed U.S. bond funds, according to Bloomberg. Why not tweet about that, instead of tax or the price of milk? Why tweet at all?

The spin doctor’s answer might be that the old ways of communicating — everything’s rosy, here’s a press release, now get lost — are over. David Dubois, associate professor of marketing at INSEAD, reckons there’s no obvious way of putting the Twitter genie back in the bottle. Today’s customers have become so used to engaging directly with companies and CEOs that sticking one’s head in the sand is no longer tenable.

So in that sense, if Gundlach’s performance were to fall off a cliff, his public persona (free-thinking, contrarian, cynical in a realpolitik way) might reassure clients more than a canned statement or newsletter.

But Twitter isn’t exactly a controlled environment. The more users sign up, the greater the platform’s obvious helplessness in the face of spam accounts, hoaxes and what its own CEO calls conversational “toxicity.” The online megaphone that allows Bill Gates to enlighten fans about philanthropy or Tim Cook to thank customers personally is the same one that lets Donald Trump insult women and hoax accounts impersonate billionaires like Elon Musk (even if his own account is often entertainment enough).

Twitter Inc. says it is combating malicious activity like spam and fake accounts, but it seems woefully under-resourced, with about 3,372 staff in total at the end of 2017 — Facebook Inc. has seven times as many — and a CEO unsure of specific measures to take. There’s a so-called “tragedy of the commons” at play: Plenty of people like using Twitter but no one’s interested in cleaning it up.

Which brings us back to Gundlach’s Twitter account. The fund manager became noticeably more aggressive on social media in 2017, taking exception to a “fake news” article about outflows from his flagship fund before it was even published. There’s an increasing temptation to shout aggressively to cut through the noise, and that’s one way in which a trigger-happy Twitter persona can backfire. How long before clients start to gauge a fund’s performance from the agitated tone of its manager’s tweets? Regulators might also get involved: Musk’s infamous “funding secured” tweet for Tesla Inc. ended up costing him $20 million and the carmaker’s chairmanship for at least three years. He still tweets daily.

There are many ways to be on Twitter that don’t involve taking extreme risks with your image or company. Letting communications professionals take control of your account is one. Taking a deep breath and counting to 10 before posting — preferably calling a lawyer during that interim — is another. But however much self-restraint and control CEOs apply to their tweets, Twitter has problems as a platform. When the medium is the message, and the medium is toxic, sometimes stepping away is good for everyone.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Lionel Laurent is a Bloomberg Opinion columnist covering Brussels. He previously worked at Reuters and Forbes.

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