Investors Increasingly Tap Social Media for Stock Tips


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An eternal optimist, Liu-Yue built two social enterprises to help make the world a better place. Liu-Yue co-founded Oxstones Investment Club a searchable content platform and business tools for knowledge sharing and financial education. also provides investors with direct access to U.S. commercial real estate opportunities and other alternative investments. In addition, Liu-Yue also co-founded Cute Brands a cause-oriented character brand management and brand licensing company that creates social awareness on global issues and societal challenges through character creations. Prior to his entrepreneurial endeavors, Liu-Yue worked as an Executive Associate at M&T Bank in the Structured Real Estate Finance Group where he worked with senior management on multiple bank-wide risk management projects. He also had a dual role as a commercial banker advising UHNWIs and family offices on investments, credit, and banking needs while focused on residential CRE, infrastructure development, and affordable housing projects. Prior to M&T, he held a number of positions in Latin American equities and bonds investment groups at SBC Warburg Dillon Read (Swiss Bank), OFFITBANK (the wealth management division of Wachovia Bank), and in small cap equities at Steinberg Priest Capital Management (family office). Liu-Yue has an MBA specializing in investment management and strategy from Georgetown University and a Bachelor of Science in Finance and Marketing from Stern School of Business at NYU. He also completed graduate studies in international management at the University of Oxford, Trinity College.

By Rachel Koning Beals, U.S. News Money,

Plugging in to social media to track celebrity breakups and happy-hour hookups is one thing. Relying on a trickle of company information vital to your stock holdings is another matter altogether.

Social media is certainly beyond its infancy, but its role in investment decision-making is still being formed. Investors who ignore social media use by publicly traded companies, even as a compliment to other communication methods, may miss an opportunity. But do a few skipped tweets really impact a portfolio?

It’s clear that more investors want their fix of tips and news, even if they’re forced to filter legitimate information from penny-stock promotions or fake press releases. Statistics show that investors turned increasingly to their mobile devices during the stock market’s highly volatile stretch in the second half of last year. StockTwits, an investment community that is built on the Twitter microblog platform, reported a 300 percent jump in traffic from the start of 2011 through the third quarter, when European debt woes and global economic uncertainty rattled markets. StockTwits information is syndicated using the $(TICKER) tag.

Already, professional stock analysts and their amateur competition are regular fixtures on Facebook, Twitter, Google+, InShare, and other real-time information outlets. Now, an increasing number of investor relations departments are taking to social media to reach shareholders, sometimes smack in the middle of an earnings briefing, according to Toronto-based Q4 Web Systems, a consultancy for investor relations websites and financial social media.

Services are on the rise to meet investor relations needs, as companies must stand out in the barrage of data and earn shareholder trust. StockTwits now allows companies to claim their stock ticker exclusively as a handle for sending out official company postings. Companies like Dell (DELL), eBay (EBAY), Hewlett-Packard (HPQ), PepsiCo (PEP), and LinkedIn (LNKD) are among its users.

Some companies are opting for product rollout releases via social media, even forgoing a standard press release through traditional distribution channels. Increasingly, the financial media must follow company leads by this method, too. As for earnings and other stock coverage, companies are using social media to collect investor questions ahead of earnings calls then turn these queries over to the executives for timely answers. Social media sites can also collect and display company information alongside independent analyst ratings, related breaking news, and more, offering one-stop convenience.

Online marketplace eBay, which has been a leader in using Twitter during earnings release conference calls, has an ongoing conversation with its shareholders about information sharing.

Company blogger Richard Brewer-Hay writes: “The first question I ask myself before we do anything here on eBay Ink is ‘just because I can do it, should I?’ The [investor relations]-specific tweets are aimed at informing a group of individuals—regardless of size—that may not have had immediate access to the info otherwise. The concern I have if I ‘turn down the volume’ on tweets around earnings is that analysts could start speculating why I’m tweeting about one aspect of the earnings call but neglecting to tweet on another. The logic being that if I’m going to tweet one statement out of our CFO or CEO’s mouth during the call, I need to capture all of it to make sure I don’t misrepresent our earnings as a whole.”

Clearly, even those who embrace this communication method see its potential shortcomings.

With information constantly streaming right into investor hands, does that (or should that) expand their field of stock holdings or potential trades? Tracking stocks has gotten easier, right? Not necessarily.

“I’m of the belief that you can realistically intensively follow up to six stocks at one time and no more,” says Brian Gendreau, market strategist with Cetera Financial Group and a finance professor at the University of Florida.

“Now, that handful may expand or contract somewhat based on the individual, their schedule, and their dedication. But no matter the size of the investor’s portfolio, if they’re following more than, say, 30 stocks, they’re essentially running a high-cost mutual fund for themselves and likely, the professionals can do it at a much lower cost,” he says.

There’s nothing wrong with investors using trusted blogs and social media sources as filtering mechanisms for the barrage of data and opinions on what may or may not make a particular company and its stock attractive, says Gendreau. There can be value in these efficient aggregators of information.

But what investors do with that information is the true test and caution is warranted to ensure that longer-term investment goals and risk tolerance aren’t compromised by an emotional reaction to company information.

Reading, digesting, and reacting to short-term stock information is little like “trying to get a drink from a fire hose,” he says.

But, for a crowd thirsty for information (or at least under the impression that they’re thirsty), there’s no turning back.


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