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How does forums or subreddit like WSB work for stock advice? At-least on TV, the advisors would disclose whether they hold positions or did they advice their cl

How does forums or subreddit like WSB work for stock advice? At-least on TV, the advisors would disclose whether they hold positions or did they advice their clients for the same stocks since they have a reputation to protect; In public forums won't everyone just advice based on their vested interest? Are these forums large enough for the 'law of large numbers' to do its thing and that's what these analysts are looking for?

scatters 6y ago
The vested interest is the point. Why would you trust someone hyping a stock if they don't stand to benefit from any price rise?
- yokaze 6y ago
  > Why would you trust someone hyping a stock if they don't stand to benefit from any price rise? Because they wouldn't be _hyping_ a stock? If someone owns stock, they benefit from a price rise, so any evaluation is a reflection of that. If someone doesn't own stock, they don't benefit from a price rise, but from rendering a correct evaluation.
  - bananaface 6y ago
    Someone who doesn't own a stock benefits from the publicity. Peter Schiff has made a lot more money from books and his gold brokerage than investing in gold.
- michaelt 6y ago
  This is the natural contradiction in stock buying advice. If the guy making the recommendation doesn't hold the stock, that makes his advice suspect as why isn't he following his own advice? But if the guy making the recommendation does hold the stock, that makes his advice suspect as he'd profit just as much from promoting bad stocks as good ones. Isn't he just recruiting greater fools?
  - lethologica 6y ago
    That reminds me of a question I was once asked: You're in the hospital and are about to have surgery. You see the surgeon, just before the surgery is about to start, reading up on the operation he's about to perform in a textbook. Do you trust that surgeon more, or less now?
    - dstick 6y ago
      Interesting question, but the answer has to be less. I don’t have to lookup certain Sql queries, or code syntax because I know it by heart. Pretty sure I can whip out a prototype without leaving the IDE. If he’s looking something up, even if just for a quick refresher, that means it stems from some sort of doubt / insecurity.
      - piva00 6y ago
        This is not a prototype, this is a surgeon performing production-level work. It's the same as if you had to whip out a basic service (as trivial as it core domain logic could be) but with all the details it need: deployment pipeline, monitoring, logging, a future-proof architecture (or do you want to be living with subpar heart surgery because the prototype was faster to deliver?). The analogy breaks down very quickly, I just wanted to demonstrate how absurd your statement is.
        imtringued 6y ago
        It is entirely possible that looking at how to perform the procedure prevents fringe failures of surgery. Imagine your surgeon does his job extremely well but it turns out he performed the wrong surgery on the wrong patient because he trusted his memory too much.
    - dwighttk 6y ago
      Less. I want a surgeon to have done my procedure a good number of times already recently (if I get to choose.)
- finolex1 6y ago
  That makes perfect sense if the person hyping the stock is relatively unknown and has minimal reach. Things get murky if an individual has enough of a following to move markets. If someone with enough clout, say Ackman or Dalio start pitching a particular stock, it's difficult to know whether they actually believe it will rise or if they hope to profit off others listening to them.
- Abishek_Muthian 6y ago
  Advice from vested interests might not be always beneficial to the investor or the market e.g. From some one trying to short the stock.
taneq 6y ago
It’s more or less equivalent to getting hot tips from 4chan. 95% dross, 4% illegal and 1% priceless insight. The fun part is figuring out which is which.
- JumpCrisscross 6y ago
  > 1% priceless insight Are there real examples of this? Not "the stock was discussed on r/WSB and then went up," but a cogent line of validated analysis one would pay for on Wall Street?
  - robjan 6y ago
    The DD (daily discussion) threads usually have more reasonable insights than the individual submissions.
  - celticninja 6y ago
    No. Confirmation bias means that people who make good/lucky bets might look like sages, however even a blind squirrel finds a nut occasionally.
  - melenaboija 6y ago
    From an outsider it looks as just luck that 1 out of 100 advices is useful although I guess the relevant part is the value of that 1%. In any case I don't know if I would trust a source of information like that in any other field. Another question from a total ignorant is, if true, how is it possible that 1% exists and then... loop and wait until next post of investments pops up in HN.
  - lcrmorin 6y ago
    There are 'DD' authors that manage to produce good insight and get 5-6 good predictions in a row but they are quite drown in other poor DD. See the ticker GME, someone with a pristine record predicted a GME pop following a console deal before the second COVID wave. Somehow he timed it perfectly (GME / Microsoft partnership annouced less than an hour after that post). That was a good DD and people apparantly made good money. Then it was followed by a tremendous amount of other poor posts (yolos, shitpost and 'gut feeling' DD) AFTER the surge. Without any information it is rather difficult to distinguish between the 'good' and 'bad' ones. There are some people tracking performances of different authors but I did not get to see an exhaustive study that would conclude one way or another. Edit: ok nevermind the GME DD exemple. I tried to find it to link it here, but it is now deleted. People are claiming the author was a Microsoft Insider. Disclosing that info was highly illegal. I don't know what would be the legal ramifications of trading on illegal info when you don't know that said info is illegal. But I knwo that being investigated by a 3 letters agency is something you want to avoid.
cik 6y ago
Think of it as a real-time pump and dump. Professionals view it for sentiment validation - and there are several tools that already attempt and provide that on Bloomberg terminals using combinations of Webull, Stocktwits, and WSB to name a few. Part of this is stock moves - but some are purely the underlying options, a lot more of what WSB trades. Given that (many) options have little to no movement (where little is < 100 contracts a day) cataloging and tracking this sentiment activity can be incredibly valuable, assuming you have all the data.
deleted 6y ago
[deleted]
srtjstjsj 6y ago
WSB is frequently temporarily disabled due to financial crimes. One of the mods was arrested in 2015.
mter 6y ago
> At-least on TV, the advisors would disclose whether they hold positions or did they advice their clients for the same stocks since they have a reputation to protect; In public forums won't everyone just advice based on their vested interest? I'm pretty convinced that a number of people are profiting by buying a position, then making a post about why that's the correct position to be in, then after they the post position, they sell it to the people reading their post. If you hold the position at the time of your post, that's considered evidence that you believe in the position and your advise. /wsb/ is good for sheer entertainment and/or straight up gambling and is completely fine for 99% of people. It's also very bad for the occasional "I just lost my rent money what do I do" or that kid who killed himself after using robinhood.

scatters 6y ago

The vested interest is the point. Why would you trust someone hyping a stock if they don't stand to benefit from any price rise?

yokaze 6y ago
> Why would you trust someone hyping a stock if they don't stand to benefit from any price rise? Because they wouldn't be _hyping_ a stock? If someone owns stock, they benefit from a price rise, so any evaluation is a reflection of that. If someone doesn't own stock, they don't benefit from a price rise, but from rendering a correct evaluation.
- bananaface 6y ago
  Someone who doesn't own a stock benefits from the publicity. Peter Schiff has made a lot more money from books and his gold brokerage than investing in gold.
michaelt 6y ago
This is the natural contradiction in stock buying advice. If the guy making the recommendation doesn't hold the stock, that makes his advice suspect as why isn't he following his own advice? But if the guy making the recommendation does hold the stock, that makes his advice suspect as he'd profit just as much from promoting bad stocks as good ones. Isn't he just recruiting greater fools?
- lethologica 6y ago
  That reminds me of a question I was once asked: You're in the hospital and are about to have surgery. You see the surgeon, just before the surgery is about to start, reading up on the operation he's about to perform in a textbook. Do you trust that surgeon more, or less now?
  - dstick 6y ago
    Interesting question, but the answer has to be less. I don’t have to lookup certain Sql queries, or code syntax because I know it by heart. Pretty sure I can whip out a prototype without leaving the IDE. If he’s looking something up, even if just for a quick refresher, that means it stems from some sort of doubt / insecurity.
    - piva00 6y ago
      This is not a prototype, this is a surgeon performing production-level work. It's the same as if you had to whip out a basic service (as trivial as it core domain logic could be) but with all the details it need: deployment pipeline, monitoring, logging, a future-proof architecture (or do you want to be living with subpar heart surgery because the prototype was faster to deliver?). The analogy breaks down very quickly, I just wanted to demonstrate how absurd your statement is.
      - imtringued 6y ago
        It is entirely possible that looking at how to perform the procedure prevents fringe failures of surgery. Imagine your surgeon does his job extremely well but it turns out he performed the wrong surgery on the wrong patient because he trusted his memory too much.
  - dwighttk 6y ago
    Less. I want a surgeon to have done my procedure a good number of times already recently (if I get to choose.)
finolex1 6y ago
That makes perfect sense if the person hyping the stock is relatively unknown and has minimal reach. Things get murky if an individual has enough of a following to move markets. If someone with enough clout, say Ackman or Dalio start pitching a particular stock, it's difficult to know whether they actually believe it will rise or if they hope to profit off others listening to them.
Abishek_Muthian 6y ago
Advice from vested interests might not be always beneficial to the investor or the market e.g. From some one trying to short the stock.

taneq 6y ago

It’s more or less equivalent to getting hot tips from 4chan. 95% dross, 4% illegal and 1% priceless insight. The fun part is figuring out which is which.

JumpCrisscross 6y ago
> 1% priceless insight Are there real examples of this? Not "the stock was discussed on r/WSB and then went up," but a cogent line of validated analysis one would pay for on Wall Street?
- robjan 6y ago
  The DD (daily discussion) threads usually have more reasonable insights than the individual submissions.
- celticninja 6y ago
  No. Confirmation bias means that people who make good/lucky bets might look like sages, however even a blind squirrel finds a nut occasionally.
- melenaboija 6y ago
  From an outsider it looks as just luck that 1 out of 100 advices is useful although I guess the relevant part is the value of that 1%. In any case I don't know if I would trust a source of information like that in any other field. Another question from a total ignorant is, if true, how is it possible that 1% exists and then... loop and wait until next post of investments pops up in HN.
- lcrmorin 6y ago
  There are 'DD' authors that manage to produce good insight and get 5-6 good predictions in a row but they are quite drown in other poor DD. See the ticker GME, someone with a pristine record predicted a GME pop following a console deal before the second COVID wave. Somehow he timed it perfectly (GME / Microsoft partnership annouced less than an hour after that post). That was a good DD and people apparantly made good money. Then it was followed by a tremendous amount of other poor posts (yolos, shitpost and 'gut feeling' DD) AFTER the surge. Without any information it is rather difficult to distinguish between the 'good' and 'bad' ones. There are some people tracking performances of different authors but I did not get to see an exhaustive study that would conclude one way or another. Edit: ok nevermind the GME DD exemple. I tried to find it to link it here, but it is now deleted. People are claiming the author was a Microsoft Insider. Disclosing that info was highly illegal. I don't know what would be the legal ramifications of trading on illegal info when you don't know that said info is illegal. But I knwo that being investigated by a 3 letters agency is something you want to avoid.

cik 6y ago

Think of it as a real-time pump and dump. Professionals view it for sentiment validation - and there are several tools that already attempt and provide that on Bloomberg terminals using combinations of Webull, Stocktwits, and WSB to name a few. Part of this is stock moves - but some are purely the underlying options, a lot more of what WSB trades. Given that (many) options have little to no movement (where little is < 100 contracts a day) cataloging and tracking this sentiment activity can be incredibly valuable, assuming you have all the data.

deleted 6y ago

[deleted]

srtjstjsj 6y ago

WSB is frequently temporarily disabled due to financial crimes. One of the mods was arrested in 2015.

mter 6y ago

> At-least on TV, the advisors would disclose whether they hold positions or did they advice their clients for the same stocks since they have a reputation to protect; In public forums won't everyone just advice based on their vested interest? I'm pretty convinced that a number of people are profiting by buying a position, then making a post about why that's the correct position to be in, then after they the post position, they sell it to the people reading their post. If you hold the position at the time of your post, that's considered evidence that you believe in the position and your advise. /wsb/ is good for sheer entertainment and/or straight up gambling and is completely fine for 99% of people. It's also very bad for the occasional "I just lost my rent money what do I do" or that kid who killed himself after using robinhood.