Michael Harris

Nov 21, 2020

4 min read

Information Dissemination in Financial Social Media

Financial social media growth accelerated with the advent of microblogging and social networking. The biggest boost came in late 2000s with Twitter. By 2012, Twitter had more than 100 million users posting more than 340 million tweets a day. A fraction of those users were professionals in the finance sector, traders and investors.

Before the explosive growth in social media, anyone interested in market-related information had to use search engines to find a relevant website, or follow links in financial magazines and other publications. The flocking to social media initiated competitions for dissemination of information.

I joined Twitter in August 2010 and I immediately noticed the efforts to compete for financial information dissemination. These efforts were based on different methods but the two predominant were link aggregation and network boosting, or combination of the two. Success for these methods depended among other things on how early in the game one started to implement them, their credentials and network size.

Link aggregation

Link aggregation is a simple method for information dissemination. This method is successful because most people are willing to forfeit access to other useful information in exchange for the comfort of being presented with a list of what they should be reading. One of the problems with this method is that the published lists may be biased. Another problem is that the aggregation may be designed to favor a certain network of people. By the time people realize there are many others who could have provided better information, those authors or bloggers may have already given up due to limited audience. I have seen that happening to some good people.

Link aggregation has some other problems. One of the most serious is that google may penalize search rank for websites if, for example, excerpts from content are included below the links in aggregator websites. If the aggregator website has higher search rank, then it was assumed at least in the past to be the content creator and the website with the original content was penalized and virtually no one could find it in search results. There are claims this was fixed in the last few years especially by including a link to “original content” after the excerpt. Nevertheless, aggregation was used in many cases to gain search credibility at the expense of others. It happened to me with an aggregator who always also linked his content but all other links included a “noreferrer” for search engines. In this way, the aggregation website gained popularity due to many linking to it while the linked content got no credit in search engines.

Link aggregation is a powerful method for dissemination of information. In financial social media, few succeeded doing that due to their hard work but more importantly the hard work of other people. In addition, it is fair to say that many unknown people became well-known due to aggregation. But the end of the game is coming for aggregation due to artificial intelligence and new search engines that will achieve the same task but without human intervention. This does not mean that there will be no bias in artificial intelligence but the era of manual link aggregation, and any gains from it, is coming slowly to an end.

Network boosting

When you see messages in social media that include, for example, “my good friend X (wrote) (said) (published)…”, there is high probability this is part of network boosting. I recall numerous times after the financial crisis bottom in March 20029, specific individuals who were audacious permabears getting boost by a small network of people who were involved in financial information dissemination. In general, this is normal function of social media and there may not be malicious intent but many may assign more credibility to a cretin to their own detriment because someone with a large follower count refers to them as “friend”.

There is an effort in social media by many people to become part of an influential network and that may lead to “cult followers’ who applaud every single opinion of a “leader” without any scrutiny and further boost their credibility. This is a positive feedback loop that can result in exponential rise in the number of followers of network leader(s). One serious problem with the cult following phenomenon is that certain people the leaders disagree with can be massively blocked, denied a fair argument, or even attacked by cult followers who struggle to gain the acceptance from the leader in the form of a like or mention.

Network boosting is very powerful and can be used to promote valuable content or undermine it. It also takes hard work to create and maintain a network. This is the 0.01% of social media that controls what the rest have access to. There may also be financial benefits to growing a network in terms of indirect advertising revenue. There are rumors some in financial twitter receive large sums of money to indirectly promote products.

Are you exclusively following a link aggregator or a network leader to get your information? If so, you may be missing other important information these aggregators or networks obscure or are not aware of. Finance and especially trading and investing are about doing your own homework. If someone else does the homework for you, chances are there is little or no edge in what you are being served due to massive distribution of same information.

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