Influencers & Advice
We’re already halfway through February, which means 2023 is flying by! Hopefully, you’re still on track and in-charge of your New Year’s resolutions or any goals that you might have set for the year. If, by chance, one of those goals was to be more in charge of your finances this year and you’re looking for advice or tips on social media, I would like to add a word of caution.
Be careful getting too much of your information or your advice from Facebook, Twitter, Reddit, or YouTube – and I understand that means us as well – and here’s why:
Some of the headlines that you might have missed towards the end of last year was one like Kim Kardashian was fined over $1,000,000 by the SEC for promoting cryptocurrency. The reason she got in trouble was because she did not tell anybody that she was being paid to promote that particular cryptocurrency. Another one and the one that I want to focus on a little bit more was Eight influencers were charged in a $100 million illegal pump and dump scheme. What they were doing with this scheme was eight influencers that had a pretty decent following would go out and buy a particular stock themselves, and then they would promote that stock to all of their followers. When they promoted it to their followers, and those millions of people went and purchased this particular stock, it inflated the price. Then, these guys would sell it once the price had inflated and capture all the gains on those. Now, they had obviously done this enough and worked in coordination long enough to where it generated a profit of $100 million through this scheme over the years. It’s not to say that the stocks they picked were bad, it’s not to say the stocks they picked we’re good or indifferent, it’s just what they were doing is not lining up with how our industry is regulated. You can’t front-run sales and you can’t front-run advice to your clients (not to say that these were their clients).
Now the reason I asked for caution if you’re getting your advice online is half the time, you don’t know who these people are. Just because a guy’s Twitter handle is StockPickSteve does not mean he knows anything about stocks and doesn’t mean he’s great at picking stocks. You want to make sure that if you’re getting your information or getting your advice from somebody, that you know who it is and that you know you can trust the information or the advice they’re giving you. The last thing is if you’re going to take your advice from online, make sure it’s advice that pertains to your situation or whatever your goals are, so that the advice matches with what it is that you’re trying to accomplish.
So just a word of caution to be careful getting too much of your advice from online and make sure you can trust that advice if you’re going follow it. Y’all have a good one!