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Digital media has opened up a whole new world of possibilities for new age investors and traders. In a 2015 research study conducted by the Brunswick Group, 77% of investors surveyed reported using digital media to investigate an issue, while 41% said they had used that information to make an investment decision.
Blogs featured prominently across the board in the research, which canvasses investors in North America, Europe and Asia. Presentation sharing platforms such as SlideShare and Prezi ranked second to blogs, while micro-blogging sites like Twitter and StockTwits were the third most popular digital media among investors.
South African amateur trader/investor Bryan Stewart is a firm believer in the power of social media to inform buy and sell decisions. Stewart is relatively new to the equities game, but has grown his portfolio at an annualised rate of around 35% since he started in August 2015. He is a big fan of Twitter to help guide his investment decisions.
“What I love about Twitter is its immediacy,” he says. “News tends to break first on social media, usually before any official SENS announcement is made. That little bit of forewarning can make a huge difference when it comes to making a trade decision.
“Tweets, by their very nature, are punchy and to the point. If something catches my eye I’ll do a bit of research before coming to a decision on whether to act or not. I have learnt to trust this process and have placed many successful trades this way”
Stewart says he has learnt a great deal about markets and investing by following accounts and conversations on Twitter.
“If you follow an account closely over a period of time, eventually you get to know the rhythms of communication,” he says. “One of the accounts I track is @FXStreetNews, which is a good forex trading indicator. When I first started following the account the language was foreign to me, but over time I’ve started to understand it better. I have developed a feel for what each tweet means in FX markets, where to find more info if I need it, and how to respond, if at all.”
Of course, there are risks involved. Not every tweet pans out – and Stewart warns against tweeting or acting on tips.
“Posting tips is very risky, so people tend not to do it,” he says. “We tend to say things like, ‘This share seems undervalued at the moment’ or ‘This company has announced expansion plans’ to invite discussion and start conversations, rather than to recommend a trade. I would never place a trade based purely on someone’s comments on social media. It’s definitely best to do research first.”
Apart from conversations and research, Stewart believes social media is a great vessel for education.
“Not many individuals or organisations use digital media effectively for investor education,” he says. “As a new investor I found it really difficult to come to grips with the terminology and the conventions. I relied a lot on EasyEquities, a DIY online investment platform, to explain the process and give me options. The EasyEquities blog is a very useful resource for explaining the fundamentals of investing. It also provides good fundamental and technical analysis for the more experienced investor.”
Stewart also uses the Twitter feeds of established financial media to get quick, reliable information.
“I have a Twitter list of financial media that I monitor constantly to see what’s happening in the listed-company space and the markets,” he says. “Having immediate access to this type of information is truly invaluable.”
Most importantly, Stewart says keeping an eye on Twitter gives him a good idea of market sentiment.
“Just watching what people say on Twitter gives a good idea of market sentiment, which is one of the strongest drivers of performance.”
Here are some of the accounts that Stewart follows:
@EasyEquities: Useful educational information with an active online investor community
@FXStreetNews: Good, up-to-date forex trading indicator
@GTPB_ZA: Daily market update snippets via podcast or SMS
@JSE_SENS: For official JSE news
@SATRIX_SA: A good financial news aggregator and blog
And some individuals who are active on Twitter and good to get to know:
And, of course, Stewart himself: @b_St
