Investing.com survey confirms Reddit et al. as standard for retail traders

Rick Steves

Some within the industry have been saying that the social media trading frenzy is coming to an end, AMC aside. We’ll wait and see. 

According to a survey conducted among 1,302 U.S. investors by Investing.com, over 20% said they use Reddit to make an investment decision.

More than 17 percent of investors born from 1928-1980 have also used Reddit to actively drive financial decisions and nearly half of investors above 40 years old have been on Reddit or downloaded the app since the Gamestop craze.

Jesse Cohen, senior analyst at Investing.com, said: “It’s not at all surprising, given the recent Reddit WallStreetBets Meme Stocks saga, which dominated markets earlier this year. The sharp spike and huge gains in those names drew investors – young and old alike – to the WallStreetBets forum to find out what stock everyone was coordinating to buy next.”

More than half of respondents have used some form of social media platform to research an investment decision, the survey found, with over 20 percent using Twitter, 17 percent using Stocktwits, and 7.5 percent using Facebook. Nearly half of those who have used social media to drive investment decisions ended up buying Gamestop or AMC stocks.

Most respondents have only recently started using Reddit for that purpose but they plan to continue doing so during the coming year.

“The dramatic rise in retail investing seems like it’s here to stay, and that should bode well for social media platforms like Reddit. These social media forums are replacing traditional financial news outlets as the place-to-go to research and make informed financial decisions”, the Investing.com analyst added.

Earlier this month, Capital.com reported that more than 63 percent of all new trades executed by UK traders in the prior two weeks have been in financial derivatives linked to shares in the US cinema chain AMC Entertainment (AMC).

“With the crash in crypto during May, you might be forgiven for thinking that the new breed of traders has struggled to get the lottery ticket fix in financial markets. But fear not – as crypto has waned, the so-called meme stocks have come back from hibernation”, said David Jones, Chief Market Strategist at Capital.com.

“Markets can be difficult enough to explain at the best of times but trying to apply logic to AMC which is up around 3000% this year – depending on where in the day you are looking at the price – is a little futile. It’s the concerted effort of thousands of small investors banding together to put one over on Wall Street.

“So far, they have been well-rewarded and who knows when the music stops? It’s a new phenomenon for 2021 and it is fascinating to watch, just don’t expect to be able to call the top in this one. We may have already seen it, but then again perhaps it doubles in price once more. The volatility is really off the charts and chances are, a little like the cryptocurrency rout in May, when the price turns then a lot of fingers will get burnt”, said Mr. Jones.

Some within the industry have been saying that the social media trading frenzy is coming to an end, AMC aside. We’ll wait and see.

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