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Do transactions on social trading platforms predict the stock market behavior of the aggregate private sector?

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  • Horn, Matthias
  • Schneider, Julian
  • Oehler, Andreas

Abstract

We analyze the relation between virtual stock holding changes on a social trading platform and stock holding changes of all private investors in a national economy. Our data sources are the social trading platform wikifolio.com and the Securities Holdings Statistics-Base plus (SHS-base) of the German central bank. We find that the transactions of signal providers on wikifolio.com are a good proxy for aggregate transactions of private investors – mirrored by the SHS-base – during the same month, and a good predictor for the aggregate transactions of the private investors in the following month.

Suggested Citation

  • Horn, Matthias & Schneider, Julian & Oehler, Andreas, 2024. "Do transactions on social trading platforms predict the stock market behavior of the aggregate private sector?," Finance Research Letters, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:finlet:v:66:y:2024:i:c:s1544612324006986
    DOI: 10.1016/j.frl.2024.105668
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    More about this item

    Keywords

    Social trading; Herding; Fintech; Attention-induced trading; Retail Investor Behavior;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G50 - Financial Economics - - Household Finance - - - General

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