A social group is a place for like minded people to get together and share ideas and knowledge about their common interests. Social groups across a wide range of interests including finance and investing are active all over the world.
While the practice of joining stock investing groups is not new, the spread of social media has given it a completely new twist. People from across the country (or the world) can come together and benefit from each other’s analysis. While such social networks are a great way of getting the views of other investors and traders, they also provide the perfect platform for creating bias amongst market participants.
The problem is compounded by the fact that unlike in the real world where you get a chance to meet the participants in person; in the virtual world, you cannot be sure of the identity of other members. A lot of times corporate media marketers create such stock investing groups and try to put content rich information to make people join them on Facebook, twitter and even on privately hosted websites. While a lot of those who comment and share views on such investing groups may well be genuine, a big portion of comments comes from those who are trying to drive or swing an opinion one way or the other. Often a same agency (or person) types in many different comments under different names to create a sentiment beneficial to him or his client.
Is there such a thing as a Best Stock Investing Group?
Instead of searching for the best investing group on social media, it is better to use the social platform as a place to debate about a variety of views, a place to disagree and dispute. Ultimately, you must invest based on independent analysis. You may not yourself realize the bias it creates in your mind when you join conversations being managed by unreliable people. A good investor must learn to control his emotions, as much as learning to understand businesses and financial statements.
For a list of biases which can harm your portfolio see my post on – Behavioral finance here.
Things to look for / do when joining a social investing groups:
- Intent of the group – find out if it is something that matches with what you are looking for. Both on LinkedIn and Facebook, you can search for groups with keywords. The name itself in most cases will tell you about the intent. If you are someone who likes to research and share ideas and stock analysis, I am sure that you would not want to join a group named Stock tips in India.
- Look at the previous postings – the best social investing groups are the ones which are moderated well. If you see too many marketing / product posts on the group wall, it is unlikely that you will benefit much by joining it. A good way to assess is by checking if there are any posting rules and if people are engaging with each other. Lots of comments on previous posts are definitely a good sign.
- Join groups and pages maintained by businesses – While you may feel that such groups are more likely to be biased, the exact opposite is true. A group which is maintained by a firm or business is in effect giving you a disclosure of their bias. Those who want to create a prejudice or influence sentiment will always create an independent investing group to float their point around. Closed circles are generally better managed.
- Do not join too many groups & make sure that you participate – While you can join many groups (a total of 50 on LinkedIn), try not to join more than 8-10 at a given point of time. To get any benefit from joining, what’s most important is that you participate and interact with the influencers. Ask questions and answer those who make comments on your posts. See a recent post of mine here – Wal- Mart Stores in India: What Investors should know.
- Look to join groups run by identifiable people – Avoid joining groups run by those who do not have a human interface. If there is a moderator who does not have a personal profile, avoid the group.
- Be Available on Social Media – Get in on the act yourself. The best place to start with social media is having a twitter handle of your own. Start following those who are active in your area or interest on twitter.Click on the image above to Join me on Twitter. On twitter, people try to give out the best links and share high quality information. Re-tweet good informative posts shared by others and you will soon start getting a list of followers of your own.