Social Investing, Is the latest buzzword in finance.
Using the “knowledge or wisdom” of the collective masses.
The concept is, by everybody collected together they will be able to “beat the system” and follow or copy the most distinguished, successful Investors on the platform.
Does it work?
The answer is yes & no. It can work up to a point if, the results are represented clearly without manipulation, additionally time and effort is put into monitoring portfolios.
The biggest issue is, the mentality of the “copiers”.
1.Many have the misconception that, they will make a small fortune by copying a top preforming Investor, when they eventually remember to log in to their account. Remember “If it seems to good to be true…….”
2. Not enough research is done on the Investor, his strategies, and the amounts needed to cover the Investment, particularly if the investor likes to move out “stop losses“.
3. Too quick to jump ship at the 1st loss. Its the same old story, as long as people are making money everything is fine until…………. someone loses $1……then all hell breaks loose. Copiers have to understand, no matter how good the track record of the person they are copying, there will be losses sometimes. This is a simple fact of investments.
4. Crowd theory works in 2 directions, when things are good they are great, when there is an issue, then everybody knows about it. Sometimes the rumors are not true, with social media, the damage is already done.
5. Most of the top copiers are NOT PROFESSIONAL INVESTORS, they generally are normal everyday people like you. Most of them have full time jobs and the Investing is done as a sideline.