Social Media and your wallet

If you watched the Dow today, you most likely would have seen it suddenly tank a little after 1 pm. While momentum was regained and the Dow finished strong, why did the sinkhole occur?

The simple reason lies in one word: Twitter.

The Associated Press Twitter account was hacked into, allowing an unscrupulous person to post a picture of the White House burning, "reporting" explosions at the White House and injury ostensibly sustained by President Barack Obama.

While this issue was quickly rectified, it does reveal how powerful our interconnected world can be swung on pure mob mentality. The Dow lost 147 points in less than three minutes after the "report" came out on Twitter, briefly entering into the red before returning to a gain of 152 points to end the day.

Remember that most people trading in the stock market are, well, people. Even computer algorithms can be triggered by trading on a whim. We must realize that the market will be swayed by momentous events, but also retain a rational mindset to truly succeed.

Andrew Jabara
President of the E-Stock Club

(A glimpse of the Dow's swoon, courtesy of MarketWatch)