An investor can obtain information in many ways. For example, with binoculars to control the passage of tankers. Or with satellite data to examine production in refineries or the arrival and departure of cars in the parking lots of shopping centers of a supermarket chain. The French company Kairros, for example, is dedicated to obtaining all kinds of data on the petroleum market, including even vehicle gas emissions. Thinknum Alternative Data offers hedge funds a tool to follow the talk on the Reddit WallStreetBets network forum, where the crazed ‘bubble’ of recent days around GameStop, AMC and other companies emerged.
The fact that Twitter, Facebook and Reddit move the market It is not new. In fact, funds have been following these networks for a decade. There are studies that unequivocally show that observing what is said on these platforms can be a useful strategy to invest. There are also studies that say that doing that is the best way to go bankrupt. And finally, there are studies that say it is irrelevant. After GameStop, just in case, the first of those options seems to have gained relevance.
The GameStop episode has highlighted that hoaxes on social networks are not limited to political matters, like the conspiracy theory QAnon, or health, like the anti-vaccine movement. This is how, for example, the former commissioner of the SEC – the regulator of the US Stock Exchange, similar to the Spanish CNMV – has seen it with Bill Clinton Laura Unger, who has compared ‘mania’ on the television network CNBC GameStop with the assault on the United States Capitol on January 6. It is a
The game store chain ‘bubble’ has been fueled by all sorts of conspiracy theories amplified by social media. Things like that on Thursday the action was going to shoot (fell almost 40%) or that the entire GameStop odyssey has been, in part, a consequence of manipulation carried out by large operators. One of those conspiracies maintains that everything was orchestrated by Jeff Bezos to force the bankruptcy of that company and thus make Amazon take control of the retail sales of video games. To this can be added other characters, such as Elon Musk, who, in addition, has the same status among his followers as the guru of a sect, joking about GameStop, and the mess is guaranteed. It’s the same Musk who made a pun on Twitter in 2018 between his favorite marijuana and the supposed (but nonexistent) plan to take Tesla out of the stock market that caused the shares to rise.
Social networks, therefore, amplify conspiracies not only in politics, but in financial markets. It is, once again, a problem of the lack of regulation in this sector. Perhaps tracking tankers through the Strait of Hormuz with binoculars is not the most efficient thing there is. But trying to discern the noise of information or analysis on an internet platform can be deafening. If there is no control at all, the risk of more GameStop will remain.