One of the more interesting thing to happen to people of my generation that straddles Millennials and Gen Z is an uptick in stock investing.
IDX, the Indonesian stock market, has pointed out that the total number of investors in the market spiked by 34 percent in October 2020. Approximately 47 percent of those new investors were in the 17 to 30-year-old age bracket and over 27% between 30-40. Considerably young.
Interest in Stock rising among the young?
If you look at the data above, yes. The uptick may have to do with higher media consumption and people having more ample time working from. With most things among my generation, everything – getting information and advices on stocks, transaction – happens on the internet.
As everything moves to internet, we can see it as a good thing from convenience and efficiency standpoint. This, however, also has a major shortcoming in that we are vulnerable to dominant voice on the internet. Some of these voices are more prone to giving out misinformation rather than sound advice.
The prospect of making a killing in stocks and getting rich quickly the easy way is what appears to be drawing the young to investing at the stock market promoted by influencers.
Influencers, good or bad?
I’ve been inside the market for some time now and guilty of following finance influencers. Generally, I see two kinds of influencers in stock market. The genuine one like Ligwina Hananto and there are the Kardashians of investing – those with little substance but a surplus of style.
The genuine one like Ligwina, who has over 20 years of experience in finance, has the necessary credibility to talk about it. But sometimes just having credibility is also not enough.
They also need to be good in creating content, so that their audience keep following them and not switch to the consumption of non-credible information that are better packaged, more easily digestible, and presented in simple infographics.
Felicia Tjiasaka, one of the rising star influencers in finance and the stock market, combines her expertise in finance with a witty, easy to digest TikTok format that is now much favored by the younger audience. She also helps people to understand how the stock market works and how to “win” the market.
People like Felicia and Ligwina are using their social capital to drawn their audience to buy their sponsored products based on clear financial arguments.
Then, there are the Kardashians. They are more preponderant, are those who endorse products without having proper knowledge about stocks and their trading, and thus consciously or unconsciously promote market volatility.
They have the ability to influence those young keen investors, who do not have the underlying necessary basic knowledge on stock trading, but perceive that “stocks are an easy way to get rich” and would readily swallow, hook line and sink, whatever tips, content or advice their favorite influencers were spewing.
Earlier this year, the investing community was full of debate about Raffi Ahmad’s IG post. He was accused of having endorsed a stock called $MCAS (PT. M Cash Integrasi). The stock had bottomed out at Rp625 in May last year, had slowly recovered before falling again in November. Recovery was sluggish but after Raffi mentioning that stock on the January 4, 2021, the stock soared to over Rp 2,600. At about the same time, Ari Lasso also posted the same content about $MCAS.
Later both parties were reprimanded by IDX but no further action was taken against them even though their posts made the stock bullish ~70% compared to the previous month.
The debate spikes up because there wasn’t enough regulation on Raffi’s action. Although there is Law Number 8 of 1995 on the stock market that sets prohibition on violations, fraud, price manipulation and insider trading, there are yet no specific regulations governing share endorsement in the media, social media included.
Another extreme cases involved the shares of $ANTM (PT. Aneka Tambang Tbk) and $BRIS (BRI Syariah Indonesia Tbk). Both stocks were repeatedly mentioned by Ustad Yusuf Mansyur, a popular Muslim preacher in Indonesia. Sure, he may know how to trade but his audience does not necessarily know. $BRIS was bullish and saw its price soar up to ~1000% in the last nine months but then fell in February 2021, inflicting heavy losses to those buyers of the shares who entered the market in 2021.
Some influencers, consciously or unconsciously, are prompting people to buy into shares that are not worth it. In Indonesian, we know this as “Saham Pompom” or “Saham Gorengan”. The practice is pretty common, but when promoted through social media, it becomes even more dangerous because the audience is then much bigger.
The intentions of speaking and explaining about “cuan (money)” might have been good: to motivate youngsters to invest. But what they did not tell you was that unless you have the solid foundation needed to be able to pick, buy and sell shares at the right time, your chances of making a kill in the stock market was just at one in a million.
Influencers might be a great source of reference, but just as for any other things we read on the internet, we need to look for another reference too. Always seek a second opinion and think things over calmly. Blindly following the suggestion of influencers, no matter how good they may be, may be detrimental to you. After all, it is your money and not theirs and if you lose money, you lose your money. Not theirs.
In a way, for all the convenient the internet provides today, the world of investing hasn’t changed much since Benjamin Graham penned the classic Intelligent Investor. He describes so many people with bad advice, while good investing is all about using common sense and being intelligent about your choices.