Online Communities Lead to Risky Financial Decisions

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amk-aka-Phantom

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[citation][nom]Pyree[/nom]I do notice that I am buying more and more unnecessary computer components, upgrades and gadgets after joining THW. Am I "it"?[/citation]

Yeah, me too :D Just in my case Tom's helps to save money because it provides a lot of useful advice.
 

custodian-1

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It goes both ways with me I save some money but I find myself looking at the more expensive pieces. All the reviews does save me a lot of time when I do custom builds.
 

euston

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I wonder if they controlled for age. Wouldn't Twitter/Facebook users tend to be younger and less experienced with money in general? I would describe my financial decision making 10-15 years ago as 'risky' compared to now. Just getting out on my own, I still had the expectation that my parents/other people would help me out, much more than now.
 

velocityg4

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[citation][nom]Pyree[/nom]I do notice that I am buying more and more unnecessary computer components, upgrades and gadgets after joining THW. Am I "it"?[/citation]

I think they are talking more about Twitter and Facebook users.

However, I don't think that "Online Communities Lead to Risky Financial Decisions". Rather that the people whom make risky financial decisions (idiots) are more likely to join these online communities and actively participate.

Along with all these other studies trying to make a causal link with Facebook and Twitter for behavioral problems. When it is more likely that people with these behavioral problems have a higher than average affinity for social networking sites.

Just like some other study I read a while back where they announced that racing games causing riskier drivers and speeders. Rather than the simpler and more logical conclusion that people whom enjoy speeding and reckless driving are far more likely to play a racing sim than those whom don't care for driving fast.
 

brothermist

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Has anyone else noticed a lot more "OMG the internetz are bad for us" stories as of late? The timing seems a bit odd, taking into consideration the recent trend of governments around the world wanting to control access to, and the content of, the internet. Just an observation.
 

kyuuketsuki

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Ugh. The people doing studies like these need to be hit with a big stick upon which is written "Correlation does not imply causation, dumbass!"
 

AerieC

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[citation][nom]brothermist[/nom]Has anyone else noticed a lot more "OMG the internetz are bad for us" stories as of late? The timing seems a bit odd, taking into consideration the recent trend of governments around the world wanting to control access to, and the content of, the internet. Just an observation.[/citation]

I don't really see this as an, "OMG the internetz are bad for us!" story. You're assuming that the article is saying, "participating in online communities will affect your financial decisions". As Kyuuketsuki stated, correlation != causation.

I see this more as a reflection of these people's behavior. I.e. people who are more socially risky (people who are willing to put themselves out there more, and risk rejection, etc.) are also likely to be financially risky (put their money out there, and risk losing it).

It's not saying that the internet caused anything. It's saying that you can tell something about people by their behavior. Which is no big surprise.
 

gm0n3y

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It is true that I take into consideration the advice of other people online when considering buying/selling stocks. If the online community has a general consensus that a new major product release is a major success/failure and the stock hasn't adjusted accordingly I'd be more likely to buy/sell that stock. For example, say that right after Bulldozer came out I read the reviews and realized it was garbage (compared to expectations anyway) but AMD's stock hadn't gone down, then I would be more likely to short AMD stock. Not saying that it would be the sole factor driving me to do something (I'm more of a long term investor), but it would have SOME impact on my decision.
 

azxcvbnm321

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I think someone hit it on the head when they pointed out that the people who are most active and who are most involved and who make "riskier" transactions are also the most likely to be in a community in the first place.

It's like those who post on Toms are more likely to own computers and have the newest computer chips and devices. Yeah you think? Grandma who doesn't own a computer and can't program her DVR isn't going to be on Toms, she wouldn't be interested.
 

frederik23

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It’s odd to portray risky financial decisions as a bad practice which people are led into by their online associates. Risk is not necessarily a bad thing. For instance, studies on the long term survivability of pension portfolios consistently show that a considerable investment in stocks is good, though of the three asset classes stocks-bonds-cash, stocks are the riskiest. Greater risk taking is usually associated with a greater likelihood of loss, online communities may lead consumers applying for online loans to act in ways that are harmful to not only them personally.
 
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