Social Media and the Stock Market

Posted on 2017-04-18 by Sean Williamson

In March 2017, social media platform Snapchat launched its Initial Public Offering, or IPO, on the stock market. It is by no means the first such company to do so, and will by no means be the last. It’s just another clear indicator of the ways social media is changing, as it has changed so much of our lives already, as well as the way we think about and make investments.

Harnessing the Hive

Social Media and the Stock MarketSocial media has infiltrated our lives and affected the way we interact with the world to a huge extent. It is now possible to use a Facebook function to search for recommendations about anything, and the online gambling industry has been hugely influenced by the rise of Facebook-orientated social casinos and games. Why, then, would we not use this central resource of intelligence to make investment decisions?

The idea of hive thinking and using the Internet to access the power of this phenomenon is not a new one. Hive thinking refers to the process of aggregating the opinions of a large group of people, or a hive, to come to the most likely outcome about any particular situation.

Hive thinking has been used with varying degrees of success over the years, and social media seems like the perfect platform to harness the economic and financial opinions of armchair experts and not-so-armchair experts. Pundits of hive thinking for investment argue that the huge pool of opinions available online would be equal to the sophisticated research tools available to Wall Street traders, and there seems to be a worldwide shift in finance professionals’ willingness to make their own portfolios public. All of this bodes well for successful hive thinking on social media platforms, and could well be the way many opinions are formed by the applications we use in the very near future.

Strong Trading Options

But back to Snapchat’s new IPO. Using the power of hive thinking is not the only way social media can influence the investment decisions that you make. By a somewhat more straightforward approach, buying shares in these platforms is considered by many to be a shrewd investment. Of course, tech investments have always been of interest, and the current buzz around Snapchat, LinkedIn and other platforms has already been likened to the huge dotcom bubble that grew in the 2000s.

Deciding which particular platform to put your money behind can be tricky, and you need to do as much research as possible – as is always the case with anything concerning your money. In something of a postmodern twist, it could soon become possible to call on the hive thinking of a social platform to decide whether to invest in that very company!

For now, though, the most prudent option is probably an Exchange Traded Fund, or ETF. These ETFs act as simulated portfolios; they are assigned a theme and then manage a range of stocks associated with it. By reproducing the actual stocks’ behaviour, they can absorb individual fluctuations so that you get a better payout rate.

Do Your Homework

Strong Trading OptionsIf you are going to buy stocks in individual platforms, there is certainly no shortage of information out there. Research as much as possible, and think about how to apply what you learn. Snapchat, for example, seems to be behaving much more like Twitter, with similar size companies and similarly slim profits, than Facebook, which was so confidently predicted.

But don’t just swallow this knowledge; consider what it means. Facebook went IPO after 8 years, Snapchat after only 5, so the latter company may bounce back. In addition, Facebook is constantly evolving a huge range of functions; Snapchat would do well to diversify.

With all this in mind, it would seem that Snapchat has potential and should be watched with interest for a while. Meantime, you can put your money in ETFs and the apparently solid Facebook, always watching, of course, for changes in the market!