Class
Article
College
Jon M. Huntsman School of Business
Department
Economics and Finance Department
Presentation Type
Poster Presentation
Abstract
The internet and smartphones have decreased information asymmetry in the stock market. More and more 'regular' people can trade securities(stocks) at their fingertips. With their user-friendly trading platforms, apps like Robinhood let individuals buy and sell stocks with minor barriers. Increased market participation has been good for markets as prices continue to rise and more capital is available. However, most retail investors lack the proper knowledge and are far more susceptible to herding behavior fueled by internet speculators. Stocks experience artificial inflation in prices as retail investors' demand increases. Traditional investors use a wide variety of information available that most individuals don't have before making trades. Nevertheless, vast groups of uniformed individuals significantly impact stock prices. For example, Kodak had an 879.8% stock increase in July 2020. Companies are becoming overvalued because of speculating being the driving factor. The threat we can potentially face with increased market participation is that many of our economic sectors could become overvalued if novice investors fund them. Presentation Time: Wednesday, 1-2 p.m. Zoom link: https://usu-edu.zoom.us/j/82747382202?pwd=MmJHRFF0SG5kR21RQ0RsR2lDN1RBdz09
Location
Logan, UT
Start Date
4-12-2021 12:00 AM
Included in
User-Friendly Investing Apps Granting Novice Access to Stock Exchanges— Overvaluing Stocks
Logan, UT
The internet and smartphones have decreased information asymmetry in the stock market. More and more 'regular' people can trade securities(stocks) at their fingertips. With their user-friendly trading platforms, apps like Robinhood let individuals buy and sell stocks with minor barriers. Increased market participation has been good for markets as prices continue to rise and more capital is available. However, most retail investors lack the proper knowledge and are far more susceptible to herding behavior fueled by internet speculators. Stocks experience artificial inflation in prices as retail investors' demand increases. Traditional investors use a wide variety of information available that most individuals don't have before making trades. Nevertheless, vast groups of uniformed individuals significantly impact stock prices. For example, Kodak had an 879.8% stock increase in July 2020. Companies are becoming overvalued because of speculating being the driving factor. The threat we can potentially face with increased market participation is that many of our economic sectors could become overvalued if novice investors fund them. Presentation Time: Wednesday, 1-2 p.m. Zoom link: https://usu-edu.zoom.us/j/82747382202?pwd=MmJHRFF0SG5kR21RQ0RsR2lDN1RBdz09