Bots Pumping Up Meme Stocks?
Game Stop meme stocks
The GameStop (and other “meme” stocks) saga continues…
Online security analysts have recently uncovered evidence that Bots (software that can impersonate hundreds or thousands of people online) were pumping up GameStop and some other buzzy stocks on popular social platforms. While this might partly explain why the prices of some out-of-favor and thinly traded small-cap stocks have recently spiked in frenzied trading, the bigger questions are – who’s running the bots and what’s their goal?
Know your source
With more and more bots infiltrating popular social platforms, should we trust stock tips from random social media accounts? One of the most important aspects of investment research is to know your source, and with the explosion of online opinions coming from virtually everywhere these days, it’s more important now than ever to rely on vetted sources for your investment information. Although you may gain insights on how the crowd is thinking by scrolling through social media platforms, it’s much more reliable to use economic, market, fundamental, and technical data that you’ve gathered from well-known and trusted sources before making your investment decisions. That’s why having a registered investment advisor is a good call.
And before you act on that “hot tip” you saw in a social media feed, or the stock tips from your coworkers, friends, or relatives who may have limited or no experience managing their own investments, make sure you do your own research. I can’t count how many times I’ve been told that someone invested in a “hot tip” and then I found out that they had lost a lot of money because they failed to do their homework before they placed their trade. The old saying “Buyer Beware” makes sense, now more than ever.