The first lady and the stocks

Et was once an influencer queen and her smartphone. She posted photos and video snippets of herself on numerous channels. This made Kylie Jenner, Kim Kardashian’s younger sister, the youngest self-made billionaire two years ago. But in February 2018, she seemed bored with one of the services, the short video service Snapchat, and wrote a post on Twitter that should cost the company a lot of money. “Alsooo, does anyone else not open Snapchat anymore? Or is that just me. . . Ugh, that’s so sad. ”It didn’t take long for the tweet to garner more than 300,000 likes. And only a short time later, the Snapchat price crashed by more than 12 percent within a few days. From their contribution in February to mid-May 2018, the price even fell by more than 40 percent.

A tweet from one of the most influential female influencers, who currently has around 280 million Instagram followers, was enough to destroy more than a billion dollars in market value. Jenner herself seemed to want to limit the damage shortly afterwards, as she wrote without further ado how much she actually loved the app. Nevertheless, it took a good year and a half for the value to recover.

Demand increases with publicity

In the 1980s, the economist Robert Merton developed the hypothesis that the demand for a share – assuming constant fundamentals – increases with increasing publicity. The two American finance professors Brad Barber and Terrance Odean from the University of California blame the huge selection: Small investors do not have the time and resources to sift through a stock universe of thousands of stocks.

So whoever makes a decision has to select. And according to the scientists, attention is a rare resource. So, if there are many alternatives, investors are most likely to consider the options that have caught their attention lately. This can happen in several ways: positive as well as negative news or noticeable price movements that tempt you to jump on the bandwagon quickly.

Cryptocurrencies and Musk

The prime example of how news influences prices was provided by the founder of the American electric car manufacturer Tesla in the past few months. Hardly a day goes by with the eccentric boss Elon Musk without a price rising or falling just because of a tweet from him. This year, it was mainly cryptocurrencies that were affected. In March, for example, Musk announced that Tesla would accept Bitcoin as a form of payment. Then, less than three months later, he ruled out that option again. After all, the energy consumption of the digital currency is harmful to the climate – which is actually no secret. Then he kept the option open again, should the digital currency be produced in a more climate-friendly way. He sent the course sometimes to new heights, sometimes downhill. And also the fun coins Dogecoin or the Shiba token with cuddly plush dogs as logos have been sent on a rollercoaster ride through tweets of the currently richest person in the past few months.

Michelle Obama and J.Crew

But it doesn’t always have to be tweets that produce news – sometimes the simple appearance of celebrities is enough. The influence that the former first lady, Michelle Obama, had on the share prices of some fashion brands is well documented. One day before the 2008 presidential election, Michelle Obama was a guest on the Tonight Show. Host Jay Leno asked her how much she spent on her wardrobe: $ 60,000 or $ 70,000? At that time she wore clothes from the clothing chain J. Crew, which sells jeans or dresses for 100 dollars. “Ladies, we know J. Crew. You can get good things online there, ”Obama told Leno and the audience.

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