Research Shows How Terrible Online Investment Advice Has Become
Follow thoughtful people and ignore the loudest ones in the room
If you took stock tips from the most popular online finfluncers, you’d lose about 2.3% per month.
This is according to a fantastic study into the quality of stock-picking social media accounts. Among other things, they found that the more followers or subscribers a finfluncer has, the worse their investment advice is.
We all lose when you give attention to the loudest people in the room rather than the most thoughtful.
Tracking finfluncer stock picks
The researchers looked at data from StockTwits, a platform where users share their thoughts on stocks, covering over 29,000 finfluencers from 2013 to early 2017.
This included details about the tweets, like what stocks finfluncers mentioned and the sentiment of their comments (positive, negative, or neutral). They also used additional data sources to get stock performance and market trends, making sure they had a solid basis to answer the question:
Do finfluncers have any idea what they are talking about?
Classifying Finfluencer
The researchers classified these finfluencers into three groups based on the quality of their advice.