[HN Gopher] Finfluencers
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Finfluencers
Author : helsinkiandrew
Score : 60 points
Date : 2023-09-05 06:26 UTC (1 days ago)
(HTM) web link (papers.ssrn.com)
(TXT) w3m dump (papers.ssrn.com)
| NoZebra120vClip wrote:
| There 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 wrote:
| onlyfins
| [deleted]
| [deleted]
| dist-epoch wrote:
| I'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 wrote:
| Now, 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?
| FerCala wrote:
| This 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%.
| filoleg wrote:
| > 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.
| Gys wrote:
| Maybe the 'antiskilled' finfluencers have other skills? Like in
| sales or PR.
| qaq wrote:
| Inverse Scott Galloway indx is doing even better
| TrainedMonkey wrote:
| This 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.
| RecycledEle wrote:
| I 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.
| JumpCrisscross wrote:
| > _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 wrote:
| Also, 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.
| globalise83 wrote:
| In other words, tracking finfluencers and doing the opposite of
| what they recommend is (in the short term) a money-printing
| machine.
| mtriassi wrote:
| Research 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.
| themagician wrote:
| Malice 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.
| dvt wrote:
| > 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.
| bick_nyers wrote:
| I'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
| JohnMakin wrote:
| It's not doing as well as I'd hoped, but not nearly as bad as I
| expected.
| shortcake27 wrote:
| Not surprising considering a monkey throwing darts at the S&P
| 500 will outperform the best analysts in the world.
| dist-epoch wrote:
| There is a conspiracy theory that Jim Cramer trades against his
| own advice.
| deltree7 wrote:
| [dead]
| castratikron wrote:
| Sounds like we need a (inverse) finfluencer index to prevent
| overexposure to Cramer.
| bick_nyers wrote:
| Don't forget the inverse Michael Burry fund to give you black
| swan protection!
| oh_sigh wrote:
| I would have thought the joke would be to bet against
| everything that makes it to the front page of WSB
| songshu wrote:
| There's MEME if you wanted to bet for instead. For betting
| against I don't know if there is an ETF yet but you can short
| MEME manually.
| vkou wrote:
| This would have either ruined, or enriched you during the
| Gamestop/AMC fiasco.
| c7b wrote:
| Probably worth adding: there's also one that tracks Cramer's
| bets, and as of today, its performance since inception (both
| March this year) is (minimally) better than the inverse one:
|
| https://www.marketwatch.com/investing/fund/ljim
|
| However, the long fund is going to be closed, because "Mr.
| Cramer and CNBC have [...] chosen to ignore the funds,
| therefore there is no reason to keep the long side going" :
| https://assets.website-files.com/637240a49ba56f7bfbe82c84/64...
|
| edit: not affiliated in any way with either project, btw
| globalise83 wrote:
| In 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 wrote:
| I 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 wrote:
| Sounds 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 wrote:
| > 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"
| mrguyorama wrote:
| You mean just putting the letters "DD" in front of your reddit
| post doesn't make you a financial genius about to pop off?
| Racing0461 wrote:
| Is blackrock's ESG/DEI ratings affecting loans/stock price
| considered antiskilled? If so then i agree with the title.
| ramesh31 wrote:
| >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]
| cesarvarela wrote:
| Thanks to "social media" I learned that investing was a thing,
| and I'll be immensely grateful for that.
| numbsafari wrote:
| Ron 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.
| erulabs wrote:
| He 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 wrote:
| He 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 wrote:
| > 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%.
| tbihl wrote:
| Besides the rest, Paul was never a senator.
| tbihl wrote:
| Start 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'!
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(page generated 2023-09-06 20:01 UTC)