5 ms·
Finfluencers
- NoZebra120vClip 3y agoThere are, amazingly, no typos in this headline. I was going to make a joke about Orcas with Facebook pages, but alas, I cannot make it work.
- noobface 3y agoonlyfins
- deleted 3y ago[deleted]
- deleted 3y ago[deleted]
- ramesh31 3y ago>Consequently, finfluencers cause excessive trading and inefficient prices such that a contrarian strategy yields 1.2% monthly out-of-sample performance And there you have it. Just another wonderful grift brought to us by social media.
- deleted 3y ago[deleted]
- numbsafari 3y agoRon Paul rode a crappy, racist, "financial newsletter" into a congressional dynasty and near presidency. This monster wasn't created by social media, but it certainly has flourished with its help. Edit: correction as Paul Sr was never a senator. He still published a racist newsletter. It bore his name. He profited from it willingly.
- QuarterReptile 3y agoBesides the rest, Paul was never a senator.
- erulabs 3y agoHe was an editor of a paper that published a racist opinion piece which he disavowed and apologized for allowing it to be published. Also, congressman, not senator. Just for some non-mouth-foamy context. I’d say hyperbole is the monster - and HN is just about as susceptible to it as Facebook is.
- numbsafari 3y agoHe was the publisher, not the editor. Had he been an editor, his later attempts at walking away would have been even more laughable. It’s not like it was some random gig. It was in his name.
- InitialLastName 3y ago> Senatorial dynasty It's only a dynasty if it includes multiple people. His son is a senator. He never was. > near presidency Which race was that? In 1988, he got a full 400,000 votes. In 2008 he got 3% of the vote in the primary, in an election Republicans were almost certainly going to lose no matter who they nominated. In 2012, he got 10%.
- QuarterReptile 3y agoStart with all the people who are interested in finance, take out from your group those whose day jobs are working out for them, and your remaining group is the set of those who like finance and need to make ends meet. 'Finfluencers'!
- cesarvarela 3y agoThanks to "social media" I learned that investing was a thing, and I'll be immensely grateful for that.
- qaq 3y agoInverse Scott Galloway indx is doing even better
- TrainedMonkey 3y agoThis is a complete speculation on my side, but could it be that anti skilled influencers are targeting a different business model? Namely, if they are being paid to promote the products, their incentives would align with reaching as many people as possible. If that holds then we have people who focus on good trading vs people who focus on getting followers... and then the differences are snowballed by engagement algos.
- JumpCrisscross 3y ago> could it be that anti skilled influencers are targeting a different business model Yes, they're entertainment. Some people invest in the market for long-term returns. Same savvily trade short-term effects. Others are there to gamble, and their gains are first and foremost hedonistic. If you're playing the game to play, anyway, why not have a sassy MC? (To be clear, I have nothing against gambling. I do have a problem with promoters who muddy the line between it and investing by repeating conspiracy theories.)
- sdflhasjd 3y agoAlso, it would make sense that they would be more likely to be paid for promoting poorer performing stock rather than what would be able to sell itself on its own merits.
- RecycledEle 3y agoI noticed several decades ago that companies preaching that gold was a good investment were selling gold. Why would you sell something that was a good investment? Why not hold onto it yourself? The answer is that when someone wants to dump a lot of gold, they hire a company to reach out to doomers and sell them gold. Same for used time-shares, investments in farms, etc.
- HFguy 3y agoI'm pretty sure this isn't true regarding gold. I.e., that some firm has a lot it wants to dump and then spends money convincing people to invest in gold. Gold is liquid, and the vast majority of it is not held for investment purposes. That is, even if you convinced some people to invest in it, it would not matter much regarding the price. And consider the costs involved in getting people to actually consider and then act on this recommendation? But if you have a reference link that refutes this, please provide it.
- globalise83 3y agoIn other words, tracking finfluencers and doing the opposite of what they recommend is (in the short term) a money-printing machine.
- bick_nyers 3y agoI've seen the joke on r/WallStreetBets to just inverse all of Jim Cramer's picks, turns out there is an actual honest to god ETF for it: https://www.marketwatch.com/investing/fund/sjim https://www.marketwatch.com/investing/fund/sjim
- deltree7 3y ago[dead]
- JohnMakin 3y agoIt's not doing as well as I'd hoped, but not nearly as bad as I expected.
- shortcake27 3y agoNot surprising considering a monkey throwing darts at the S&P 500 will outperform the best analysts in the world.
- chronic03031 3y ago> Not surprising considering a monkey throwing darts at the S&P 500 will outperform the best analysts in the world. The best analysts/managers in the world are pulling consistent 30-50% returns over the past 20-30 years. See Citadel hedge fund for example (and not the HFT Citadel Securities). The problem is, these “profits” are taken by the analysts and managers by way of incentive and performance fees, thus leaving the passive investor/LP with barely break-even risk adjusted returns.
- globalise83 3y agoIn other words, tracking what finfluencers say and doing the exact opposite of what they recommend is a money-printing machine (at least, until too many investors adopt that strategy).
- NavinF 3y agoI wouldn't call "contrarian strategy yields 1.2% monthly out-of-sample performance" a money-printing machine. Should be a small part of your portfolio
- HEmanZ 3y agoSounds like a watered-down version of the 90s. I feel like everyone was a “stock trading genius” back then, and “finance gurus” were so plentiful you couldn’t avoid them. Every generation needs to re-learn the financial mistakes of the previous one I guess.
- nologic01 3y ago> Every generation needs to re-learn the financial mistakes of the previous one I guess why is that accepted as inevitable law of nature? every generation does not need to learn the ravages of war. or the risk of snake oil salesmen in domains such as food, or medicine or any mass consumption good or service yet in the financial domain "a fool is born every minute" is somehow ok. there is definitely the thrill of gambling but I suspect fewer people would succumb to it if before every finfluencer inspired transaction they had to click on button that said: "I confirm that I am an idiot and the money I am about to lose is not essential either for myself or anybody that depends on me"
- HEmanZ 3y agoIt’s more of an observation. And it applies to the examples you have. In fact, I can’t think of a bigger realm for snake oil salesmen than I the realms of food/nutrition and alternative medicine
- HFguy 3y ago"every generation does not need to learn the ravages of war." Would not be so sure of that. I suspect the "great generation" has a lot better understanding about the value of peace than more recent generations.
- dist-epoch 3y agoI've spent many years on trading forums and I've noticed an interesting phenomenon. Which makes perfect sense if you think about it: Bad advice is upvoted, good advice is downvoted. The reason is simple: 1. 98% of traders on trading forums lose money 2. people generally upvote what confirms their beliefs Since most forum users lose money, what they will upvote in general is bad advice. This is why they all believe in stuff like technical analysis, elliot waves, and other bullshit like this, because they see that everybody else upvotes and talks about this. Blind leading the blind. So maybe the reason these "antiskilled influencers" are more successful, is because they approach trading in the same way as their followers believe is "correct".
- jameshart 3y agoNow, let’s apply the Gell-Mann amnesia analysis to this insight: If this is true on trading forums, what other forums is it true on? Is it true on technology forums? Are 98% of participants in tech forums making bad engineering decisions? Are they upvoting things that confirm their beliefs?
- filoleg 3y ago> Is it true on technology forums? Are 98% of participants in tech forums making bad engineering decisions? Are they upvoting things that confirm their beliefs? One of the main differences is that users on technology forums (thinking of something more like HN rather than r/technology or other technology-related subreddits) are typically professionally employed in those fields. So while the advice on tech forums might not be the best, it is usually not asinine or downright moronic. As for trading forums? Typically they are overwhelmingly filled with people who have never even been employed in finance in any capacity at all, and it definitely shows.
- FerCala 3y agoThis is a pretty good question. I wonder, where else would this apply? Also how does the pareto principle work here? 20% of the people produce 80% of the outcome, so the finfluencers are the 20% that produce 80% of the "advice" on forums and social media, which is based on the feedback that 80% of the people give which is based on their already established beliefs, because the other 20% of the people there are the ones that actually know stuff but aren't big enough to contrarest the 80%.
- Gys 3y agoMaybe the 'antiskilled' finfluencers have other skills? Like in sales or PR.
- mrguyorama 3y agoYou mean just putting the letters "DD" in front of your reddit post doesn't make you a financial genius about to pop off?
- Racing0461 3y agoIs blackrock's ESG/DEI ratings affecting loans/stock price considered antiskilled? If so then i agree with the title.
- mtriassi 3y agoResearch like this does make me wonder about what percentage of anti skilled finfluencers are actually the malicious case rather than misguided. That is to say, the case where they peddle some position they know will do poorly and secure a short / contrary position themselves. That way they are effectively doubling how they can monetize their audience, once as ad-revenue, and a second by profiting from audience losses. It's probably impossible to control for something like that, but it's interesting to think about.
- dvt 3y ago> It's probably impossible to control for something like that, but it's interesting to think about. Not impossible at all, SEC has already started charging crypto influencers for peddling pump-and-dump schemes. Most shitcoins you'd see on TikTok/YouTube/Instagram (I'd wager 90%+) were purely P&D schemes, where influencers/founders would seed LPs, drive up liquidity, and then pull the rug.
- themagician 3y agoMalice is, in many ways, a key ingredient to success in many spaces. While people will rarely admit it to others, many who are successful often operate knowing that wealth is something you take not something you make. The more you understand the desires and motivations of those who you are taking from the easier it is to take from them—be it from consumers or labor. When I see people who have a hard time "breaking through" and are always struggling, it's often because they lack the perspective necessary.
- HFguy 3y agoIt would likely only work if the instrument being invested in was small and illiquid (i.e., that pumping it up would actually move the price). Otherwise it would be a waste of time. I've really only heard of this in penny stocks which are illiquid. This would not work in liquid markets like rates, fx or equity indexes.
- ryukoposting 3y agoSo aggregating finfluencer tweets, reading what they say, and doing the exact opposite, is a valid investment strategy?
- ReactiveJelly 3y agoIf the opposite of "Buy this stock" is "Buy an index" then yeah, kinda!
- screature2 3y agoHelpfully, the first author published this on his website. http://www.akakhbod.com/uploads/1/3/9/6/13965273/kkls_fininfluencer.pdf http://www.akakhbod.com/uploads/1/3/9/6/13965273/kkls_fininf...