Aldrian tends to focus more on Reddit. He says he clicks on the daily discussion thread of the WallStreetBets forum — a community of about 2 million traders — and scrolls all the way down to load as many messages posted by users as possible. Using the “control F” shortcut on his keyboard, he scans comments to see which stocks are most talked about. The quantity of comments, likes or shares are indicative of where the market might be going.
“I see how many posts there are, what the comments are saying, and the amount of comments and likes,” said Aldrian, who has already bought some AMC stock. “That’s just for watching which companies will be targeted so I’ll search any stocks with super-high short interest. For catching due diligence to get in before they move, you just have to browse the Reddit frequently and look at the daily discussion threads.”
The surge in retail trading last year came with a boom in online communities focused on stock tips, trading tutorials and investment strategies across social media platforms. On TikTok, there’s StockTok, and on Twitter, it’s FinTwit. Online messaging platform Discord has investment chats, Reddit has forums and Facebook has specialized groups.
All that means that while trading has become more accessible to millions of investors, so has bad financial advice. Largely unregulated and with little oversight against financial misinformation, it’s hard to decipher the good advice from the bad. Financial industry veterans are calling for government regulation.
“I suspect our market system will survive social media, but god, this points out the need for, as we used to say in the Treasury in the 90s, a regulatory system as modern as the markets,” Larry Summers, the former director of the National Economic Council under President Obama, said in an interview with Bloomberg TV last week. “There’s always a need to regulate bucket shops and to regulate various ways in which retail investors are taken advantage of and we’re in a situation where it’s an old theme but there are new ways of doing it.”
Yet GameStop’s rally has been held up as vindication by believers against skeptics. Joey Celentano, a 19-year-old sophomore at Pace University, never spent much time on WallStreetBets, but now it’s on his radar. He’s looking at buying a small position of AMC or BlackBerry stock.
“I would have to read the WallStreetBets subreddit, and see what their plan is,” Celentano said in a text message. Asked about Gamestop, he said it was too risky of an investment, so he decided not to join in.
“I never got in,” Celentano said, followed by a facepalm emoji.
-With assistance from Brandon Kochkodin.
This article was provided by Bloomberg News.