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It's a rational strategy. There are algos which buy stocks with tickers close to well known companies in the news. Especially in these days of meme stock, thin
by 323 5y ago
It's a rational strategy. There are algos which buy stocks with tickers close to well known companies in the news.
Especially in these days of meme stock, think about it, the reason to buy $META is meta ... (mind blown)
- noja 5y agoBecause the algos are crap or on-purpose?
- dTal 5y agoI imagine there's a feedback loop. Inevitably there's going to be at least a few quick-fingered human investors who make the error, which will drive the share price up a bit. This predictable mini bump is an attractive target for bots, and before you know it you've bootstrapped another hype-driven stock.
- Kye 5y agoFor example: the rush to buy Nintendo stock following the success of Pokémon GO. Nintendo is only a 1/3 owner of Pokémon and none of the owners developed the game.
- edgyquant 5y agoBecause people tend to have more money than intelligence. I also made a similar mistake years ago. I purchased 20 shares of MRVL, thinking it was Marvel, luckily I’m not the only one and I managed to turn a profit before selling once I figured it out.
- cf100clunk 5y agoThe authors of the Rutgers study, Nikorov and Balashov, mention algos thusly in a CNN article from 2019: '(They) assumed retail investors would be making most of the mistakes. But Nikorov told CNN Business that the rise of algorithmic trading is probably the reason big mutual funds and hedge funds get fooled. “Computers scan for stocks and look for ones in play. So if there is [an] unexplained move, the algorithms don’t look for a reason. They just jump on the bandwagon,” Nikorov said.' https://www.cnn.com/2019/08/12/investing/ticker-symbol-confusion/index.html https://www.cnn.com/2019/08/12/investing/ticker-symbol-confu...