Democratisation of retail trading: a data-driven comparison of Reddit’s WallStreetBets to investment bank analysts

Tolga Buz and Gerard de Melo

Journal of Business Analytics, 2024, vol. 7, issue 4, 256-272

Abstract: We investigate whether WSB can provide valuable advice and possibly even outperform financial institutions. In a data-driven study using more than 1.6 million WSB posts published within 3.5 years, we extract and evaluate WSB’s signals for all S&P 500 stocks and compare them to more than 16,000 recommendations from the largest investment banks. While not all WSB recommendations prove profitable, their average returns compete with the best investment banks and outperform them in certain cases. Furthermore, WSB outperformed almost all investment banks at detecting top-performing stocks. We conclude that WSB may indeed constitute a freely accessible, valuable source of investment advice.

Date: 2024
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DOI: 10.1080/2573234X.2024.2354191

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