Social media has dominated lives in many ways, from helping people stay in touch with friends to providing a source of information and means of commerce. Now it is emerging as a potent instrument for investing, according to The Wall Street Journal.
One innovative developer has created a trading platform in Twitter aimed at the typical investor, whilst a number of tech-savvy companies have used social media sites to gauge consumer sentiment on certain brands or companies whose stocks are traded.
However, most investors still source their information directly from the company itself, which is the same method used by investment guru Warren Buffett. This was the finding of a survey by the Brunswick Group.
Specifically, about 57 per cent of 500 sell-side analysts and institutional investors said information directly acquired from firms carries the greatest weight on their investment decisions and recommendations. Notably, around 85 per cent of the respondents ranked direct information as one of the most authoritative sources.
Rachelle Spero, a partner at Brunswick, said: “While investors and analysts are increasingly influenced by digital and social media as the basis for investment decisions, companies and managers should be encouraged that the vast majority look to information direct from companies as the main building blocks of their investment rationales.”
It cannot be denied that social media remains a very relevant tool in the field. In fact, around 14 per cent of respondents stated that social media is one of their most influential sources of information, a notable leap from six per cent during Brunswick’s previous survey in 2011. Moreover, 86 per cent of the respondents said social media is increasingly becoming an important source of investment information.