Business & Investment

How the stock market spread by word of mouth Reuters

© Reuters. During the COVID-19 outbreak in Belfast, Irish home day trader Damian McBay is sitting next to the computer.


Corum Fulton

Stockholm (Reuters)-“The stocks just go up,” concludes the video montage, where a Ghanaian club-dancing evangelist and Donald Trump’s private minister repeatedly say they can hear the “sound of victory.”

A heartwarming meme designed to characterize bullish stock market sentiment Pfizer (NYSE :) BioNTech’s successful COVID-19 vaccine broke and has been viewed over 1 million times on Instagram and Twitter.

Much more extensive than the broker’s research notes, the meme is a new form of financial literacy (or, depending on your point of view,) behind the frenzied boom in cryptocurrency and equity retail trading on platforms like Hood. It is the center of non-literacy).

The use of market commentary on pop culture images has been praised and criticized for making the deal interesting and game-like.

“So many people are entering the stock market through Robin Hood and Bitcoin, so everyone is joking about flipping your incentive or the Fed’s intervention sending stock.” “Sound” meme.

He launched Litquidity four years ago and used memes to entertain young financial workers, but Instagram’s follow-up “litfam” has doubled since March last year to about 500,000.

Lit, who works in the financial industry and prefers not to go under his real name, is currently making money from his bystanders and is attracting sponsors from companies that want to reach younger viewers with disposable income.

Litquidity’s recent list of young people in the financial industry under the age of 30 (played in the more established Forbes magazine annual rankings) was sponsored by trading apps and eyewear brands. Lit has also partnered with the payment app Revolut to post memes.

Audience reach

For meme sponsors, the potential audience was already huge, but has grown further in the last few days.

This week, Reddit’s wallstreetbets page, which chose veteran short-selling pockets by encouraging purchase enthusiasts at GameStop (NYSE :), has added 2 million followers in the last 48 hours.

TikTok, a video sharing app with 85% of users under the age of 35, has seen 5 billion and 1.4 billion views on #sidehustle and #finance, respectively.

Irish day trader Damian McBay said social media content and memes helped intrigue his finances.

“I always thought it was dry, but Internet content is energizing it. That’s why there are fewer barriers,” said trade accumulator McBay.

This time last year, McBay had limited interest in financial markets, but after getting bored during the blockade, he is now blogging about a portfolio worth a quarter of his annual salary and companies on YouTube. I have a channel.

The trading app eToro increased its user base by about one-third in 2020 and invested $ 1.5 billion in the platform. This increased by 400% from 2019 as the Panther trapped in the house paid out cash.

However, critics say that turning finance into entertainment can create a carnival atmosphere that encourages risk-taking by inexperienced traders. “The memes and videos of dollar-wielding people are a cultural expression of joy as well as risk,” said Dr. Cesar Albarran-Torres, a media instructor at Sinbang Institute of Technology, Australia.

“Make money on video games,” Albarran-Torres said, adding that internet chatting encourages beginners to gambling in the stock market. However, many social media users see retailers as vulnerable in the David v Goliath battle with established hedge funds accustomed to taking their own path.

Twitter personality Liz Franczak tweeted, “The free market is when reddit stops trading meme options,” in connection with the suspension of stocks that are popular on Reddit’s wall street bets.

Professor Colin Camerer, head of behavioral economics, told Reuters that three million powerful Reddit traders are “in a stadium where everyone is rooting together.”

“Social media makes it possible to coordinate these mass behaviors,” Cameller said, seeing how the dynamics of this new financial phenomenon unfold when some individuals in the group want to sell. He added that it would be interesting.

Regulation is another potential threat.

However, what is lit is away from the account that recommends buying individual stocks. He says his role as a meme creator is similar to an observer or satirist.

“When things look very vibrant, I want to be careful to let you know that this may not end well,” he added.

How the stock market spread by word of mouth Reuters How the stock market spread by word of mouth Reuters

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