Why ad hominem doesn't work

Ad hominem: attacking an opponent’s character rather than answering his argument.

Let’s create an hypothetical example. It’s July 2015, and Bernie Madoff, from his prison cell, writes a 30 page article about why Under Armour is overvalued.

Ok, Bernie Madoff stole millions and millions of dollars. He’s about the last person on earth that you’d want to believe or trust. Maybe you wouldn’t want to spend a couple hours reading his 30 page report. However, sitting where we do in 2017, when UA has lost nearly 70% of it’s value, we would have to conclude that…whatever his motives may have been…he was right on the one particular (hypothetical) assertion on Under Armour.

It is right to listen to Madoff’s arguments skeptically, based on his historical behavior. It is right to trust Saul not to be deceptive, based on historical behavior…and I hope you can all say the same of me: I have never attempted to deceive. But Saul or I can be wrong. And even an untrustworthy character can be right. The point? The arguments one makes have (or lack) inherent value, regardless of the person who makes them.

We would save so much time bickering on this board if we could stick to arguing the merits of companies and not the motives of flawed humans.




It would be nice if the world was as you say, and we could simply constrain ourselves to judging each argument on its merits.

But in the world of investing - and especially when it comes to shorting - knowing the motivation, character and history of the protagonist is essential if we are to form a balanced view of the argument.

When a character has a long history of disreputable conduct, and much of that has been linked to spreading unwarranted rumours about a company in which that person has a short position, is it not sensible to treat any new allegations with skepticism?

Saul was perfectly correct to point to Left’s previous history. If I remember correctly he was also banned from trading on the Hong Kong stock exchange for similar behaviour.

I am not saying that you should ignore evidence and argument entirely.

But if, for example, Buffett made a statement that was difficult to substantiate directly, I would be predisposed to believe that his statement was true. With Left, I am predisposed to believe that any unsubstantiated statement is false. (Especially when the accusation is that a public company audited by KPMG is a massive fraud).



“People are to be respected at all times. Ideas get beaten within an inch of their lives.”

  • Mechanical Investing board motto



Please don’t take this as a start of a political thread, it is not, let’s leave it here, but…

some would say it worked very well in the last primary and general election.