As hard as we might try to be well-behaved investors, crosswinds can drive us away from the path of investing enlightenment to the dark side.

In years gone by, the old-fashioned ‘crosswinds’ were newspapers, mainstream advertising, and TV. These channels worked hard to influence our subconscious decision-making, becoming incredibly effective in their craft.

These are still prevalent but have been superseded by a virus so effective it is as addictive as class A drugs: the social media algorithm.

Algorithms that sit behind social media platforms play a significant role in shaping user experiences and influencing behavior. These algorithms are designed to analyse user data and our preferences to deliver personalised content, such as news, advertisements, and recommendations.

The now disgraced Cambridge Analytica infamously was involved in highly controversial data analytics practices, claiming to use data harvested by algorithms to predict and influence behavior.

While algorithms can enhance user engagement and provide valuable information, they can also have detrimental effects on our investment behaviors in several ways:

To mitigate the detrimental effects of social media algorithms on investment behaviors, individuals can take proactive steps to:

Finally, remember this one mantra: They only make money when you click—no click, no money, no stress!

*Footnote: Lemmings get a bad rap as they do not commit mass suicide – but they do make for a good one-liner!


Risk warnings
This article is distributed for educational purposes and should not be considered investment advice or an offer of any security for sale.

This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy, or investment product. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated.