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Srivindhya Kolluru and Ai-Men Lau are contributors at Btchcoin News, a weekly newsletter making finance and economic news accessible to young Canadian women.

If retail investors, hedge funds, online trading platforms and Wall Street investors sparked the GameStop stock trading fire, social media fuelled it.

A quick scan through r/WallStreetBets makes clear that while the forum might provide some sound financial advice, it’s overshadowed by crude humour, memes and a herd mentality. However, beneath the seemingly comical veneer of r/WallStreetBets lurks a hidden danger.

Many people who decided to jump headfirst into trading after r/WallStreetBets started to gain traction may not fully understand the financial risks.

U.S. platform Robinhood’s move to temporarily halt American users from purchasing volatile stocks as hedge funds were bailed out stoked anger and even more interest in the frenzy.

Robinhood’s actions are indicative that restricting trading, which did little to dissuade people from investing in other volatile stocks, is merely a Band-Aid solution to a financial system that is designed to put retail investors at a disadvantage. As such, investment tools should empower individuals to make informed investment decisions while understanding the risks that are involved. For example, Canadian-based Wealthsimple’s investing app posted additional warnings about using options and shorting stocks while continuing to let users trade.

But even prior to Robinhood’s decision, the GME story and r/WallStreetBets had achieved celebrity status when tech billionaires Elon Musk and Chamath Palihapitiya tweeted about the stock.

Others were drawn to the potential to make quick cash, seeking financial relief in desperate times. It’s not hard to see why many people jumped on the bandwagon; the COVID-19 pandemic has exacerbated financial anxieties, and the GME craze drew in many people who simply wanted to pay off their debts. The problem with this is that hedge funds and Wall Street investors have the financial resources and networks to shoulder losses from taking short positions that retail investors might not.

The trading frenzy points to a broader, more persistent problem: our financial literacy education needs to catch up with the realities of the social-media era.

A 2019 survey reported 51 per cent of individuals aged 18-34 used the internet to seek financial knowledge and advice. Similarly, a 2018 survey found 66 per cent of 15-year-olds rely on the internet for the same information.

While Reddit, Twitter, Instagram and even Tik Tok can make valuable insights into the stock market and personal finance accessible, these social-media channels are not vetted for accuracy and narratives can be shifted subject to the whims of posters. There’s also the sheer amount of information to sift through that is disseminated at breakneck speeds.

The antics on social media surrounding r/WallStreetBets also blurred the lines between valuable financial advice and drama, encouraging impressionable investors to make potentially risky investments.

Financial literacy education in Canada needs to evolve to reflect the current financial habits of its population, one that increasingly relies on mobile phones for financial management and knowledge. It should also incorporate education around the overall risks of obtaining such information through social media, which is often rife with disinformation and misinformation.

This isn’t to say that new technologies and social media shouldn’t play a role in financial literacy education. Indeed, in 2016, the Financial Consumer Agency of Canada (FCAC) assessed Canadians’ budgeting behaviours using the Carrots Rewards, now Optimity, mobile app. The FCAC found it effective to incentivize individuals to make actionable changes in their budgeting behaviours using points that could later be redeemed for cash rewards.

As well, according to the 2015 Program for International Student Assessment, China’s students ranked first in financial literacy. This could in part be because China has introduced video games and mobile apps to engage adolescents in financial education, a strategy that could also be adopted by Canadian secondary schools.

Bank of Portugal launched a digital finance education campaign called #toptip on security procedures for financial apps and online transactions.

Canadian schools and financial institutions can incorporate something similar by developing more engaging financial literacy campaigns through social-media platforms and mobile apps to reach the Gen Z and millennial population.

It’s borderline surreal that a new generation of investors could be taking financial advice from some redditor named WallStreetBot. But as 2020 has so painfully taught us, the absurd has made its home in our reality. If we want to better equip the next generation of investors, we need to develop a more modern financial literacy education.