An Unprecedented Time In The Stock Market - What Comes Next For Online Trading Communities?
A quick look into the future of social trading & the communities that facilitate it.
By Chris Lee and Robert Turkin
Over the past few weeks all eyes have been front and center on Wall Street, or more accurately /r/WallStreetBets after Gamestop stock ($GME) became the most talked about, and highest traded security on the planet. In the following weeks, we experienced an unprecedented level of volatility as retail traders initiated a historically significant short squeeze. With a worldwide sentiment shift regarding the staying power of retail traders, we finally glimpsed into the power of a socially influenced market, and watched the results unfold live.
While questions of regulation loom over the retail traders who banded together to shake up the stock market, and “shake-out” institutional short sellers, we think sufficient media coverage has been given to this topic and instead would like to take focus on the future of Social Trading Communities like our’s— J&M Option Trading.
WallStreetBets’ Discord Ban & The Power of Social Media Giants
On Wednesday the evening of January 27th, amidst the chaos of GME’s short squeeze, Discord banned the WallStreetBets server from its platform. Discord stated this had nothing to do with assertions of financial fraud, but rather that the server continued to allow “hateful and discriminatory content after repeated warnings”.
Whether the reasons for Discord’s ban are as they say, the timing surely is suspicious. Not long after the Discord ban, investment platforms such as Robinhood temporarily restricted the purchasing of volatile securities and their options, such as GME- citing a “liquidity issue”. This ban—in effect across the top investment platforms— lasted multiple days in some instances. Social media users raised concern over the seemingly overt “silencing” of the WallStreetbets community. Some, like Rep. Alexandria Ocasio-Cortez, a Democrat from New York, even called for widespread investigations into such seemingly manipulative attempts to stifle the market volatility initiated by retail traders.
This series of events raises concerns for social media regulation, specifically in regard to communities sharing ideas about their investments, and the market on a relatively new medium for mass communication.
Social Media has proven time and time again that it can be manipulated and regulated in favor of the interests of the companies in charge. Following the events at the U.S. capital early in the year Donald Trump’s Twitter account received a permanent ban— an action that sparked controversy and conversation over the power wielded by social media giants, and the wider implications of removing prominent figures from their online audiences.
De-platforming & Inherent Bias
The first amendment only protects individuals’ speech, so in the same sense as a private business can refuse to serve someone who is not wearing shoes for example, as long as the refusal to serve is not for reasons included in a list of protected classes, it’s perfectly legal for a social media company to decide who and what content is allowed on their platform.
With questions of legality aside, the emerging uncertainty is rather the appropriateness of the decisions made by social media companies, and the timeliness of their actions.
In the weeks that followed Trump’s twitter ban—in a month that felt more like a year—came the banning of the Parler app (a widely conservative social media platform) from the Apple, Amazon & Google App Stores which furthered assertions of inherent bias by tech and social media companies against conservative ideas.
Whether inherent bias is present on the part of these companies, there is still no comprehensive regulation on their own regulatory powers. The good news however, is that cultural prominence often seems to have the ability to overpower censorship. Nearly immediately after WSB’s Discord ban, several duplicate communities popped up in its absence to fill the gap. With such strong decentralized community, how does one proceed with reasonable moderation and regulation? This is a question that I am excited to see tackled in the near future, as social trading continues to grow exponentially.
Discord is only one of many channels for people to congregate online and share ideas. Social media progresses in such a way that if you shut down one platform, two more are likely to pop up. Technology currently moves too fast for effective regulation, which in part allowed Big Tech to gain the power over communication and culture that we naively handed them.
J&M Option Trading - A Social Trading Community
In light of renewed interest in the stock market- one thing is for certain. Humans, being social creatures will seek to democratize information and communication in any manner possible.
The cultural pivot towards investing, and social discussion regarding the stock market continues to grow at an exponential rate. Any attempts to stifle this constant dissemination of investment advice and strategy will likely have the opposite intended effect.
At J&M Option Trading, we are at the forefront of social trading communities, where like-minded investors can have a safe-haven to continue to share their ideas and process with others. We pride ourselves not only as being a place for individual traders to follow our own analysts, but also as an educational community designed to help propel each individual investor further and faster along their path to Success and Financial Freedom. As a community, one becomes many!
Our recommended strategies differ from other trading groups in that we would rather see our members learn the skills to be sustainable in the long-term, rather than to make a few bucks following a trend that may be highly-risky and short-lived.
Entering trades without proper due diligence is always discouraged, while setting and tempering expectations is always advocated for. Our traders use Technical & Fundamental analysis, along with current events to set targets for members to track on their own, so they are always prepared to take action when opportunity arises.