The Effects of Social Media on Investment Decisions within an Online Community

This case study examined the effects of social media on investment decisions within an online community. The problem was the use of misinformation by inexperienced investors to make investment decisions, with investors making investment decisions based on misinformation. Data was gathered through an online questionnaire administered through one-on-one interviews with members from an online financial community. Twenty participants were gathered; responses were analyzed for recurring themes. Results validated a relationship between social media and investment decisions exists. A strongly recurring theme was that individual investors use social media as a resource to seek out potential investment ideas and make investment decisions by gauging investor sentiment and comparing their ideology with online community behavior. Implications are that individual investors are influenced by the behavior and actions of others on social media; schools and employers should provide financial literacy courses to educate individuals on proper investing.