Many of the buyers who paid $12.05 thought they made a mistake. But on Feb. 17, shares fell through this level. Why It's Important: In early February, $12.05 was support for BlackBerry. See Also: Here's Why Stock Valuations Are Still 'Quite Reasonable' It's Not Just Airlines and Hotels.This simple concept is the key to understanding many chart patterns. But perhaps, they know more than we give them credit for. Will members of WallStreetBets be the next great investors of their generation? Maybe not. A recent job posting for New York-based quantitative fund Cindicator Capital sought someone who has been an active member of WallStreetBets for at least a year with karma - a reflection of how much a user has contributed to a community - of over 1,000 (as well as“a refined taste for memes and a sense of humour.”) So is at least one hedge fund, apparently. “I was quite impressed with some of them,” he adds. It’s clear some of the Reddit posters do their homework, coming up with well-written recommendations that include a lot of analysis and insights that aren’t completely obvious, Bradley says. The investors appeared to be acting on recommendations that earn them larger returns, suggesting that they may be able to identify high-quality reports.Īnd some of them are, actually, high-quality. The researchers, whose report doesn’t include 2021 posts and thus leaves out much of the GameStop frenzy, found that everyday investors are actually trading on these Reddit posts, with retail trading jumping 7% less than three hours after a post was published. But the research does indicate that the posters on WallStreetBets may know what they’re doing, even though they give off the air of being risk takers who are essentially gambling.ĭespite the memes and constant dumb insults thrown around on the forum, the investors actually acting on the investing recommendations may also have more know-how than you’d think. Money doesn’t even often recommend picking stocks at all, but to instead keep a globally diversified portfolio of mutual and index funds and regularly make sure it still fits your long-term goals. Many of the GameStop traders suffered major losses. To be clear, we’re not saying to throw your investing knowledge out the window and buy and sell based on a Reddit post. Massachusetts Secretary of the Commonwealth William Galvin told CNBC the GameStop mania was “reckless risk” and dangerous for everyday traders. They were called unsophisticated, rookie investors who made a game out of Wall Street. Earlier this year, an army of everyday traders in the Reddit group made headlines for pumping up GameStop’s stock price, sinking hedge funds that were shorting-selling the stock. Hawaii Alaska Florida South Carolina Georgia Alabama North Carolina Tennessee RI Rhode Island CT Connecticut MA Massachusetts Maine NH New Hampshire VT Vermont New York NJ New Jersey DE Delaware MD Maryland West Virginia Ohio Michigan Arizona Nevada Utah Colorado New Mexico South Dakota Iowa Indiana Illinois Minnesota Wisconsin Missouri Louisiana Virginia DC Washington DC Idaho California North Dakota Washington Oregon Montana Wyoming Nebraska Kansas Oklahoma Pennsylvania Kentucky Mississippi Arkansas Texas Get Started “I was expecting to find that this site attracts uninformed investors,” Bradley says. But, it didn’t stop there: the researchers found that the returns continued upwards by 2% over the next month and nearly 5% over the next quarter.ĭaniel Bradley, professor of finance at the University of South Florida and one of the authors of the report, was shocked. In fact, it’s substantially larger than the returns seen from the recommendations on the crowdsourced stock market analysis site Seeking Alpha, according to the paper. On average, “buy” recommendations saw 1.1% returns within two days of the Redditor posting. Researchers looked at over 2,000 posts on the subreddit with a clear buy or sell recommendation from between 20. But maybe you shouldn’t.ĭespite their antics, members of the subreddit r/WallStreetBets may actually have some investing skill - at least when it comes to anticipating short-term stock moves, according to researchers at the University of South Florida and the University of Kentucky. Would you ignore investing advice from a group of Internet trolls who seem eager to YOLO away their life savings while calling themselves degenerates and idolizing Elon “Daddy Musk”? Probably.
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