Transparency is critical to having meaningful discussions about investments; too bad it doesn’t really exist in today’s conversations. Sure, we’re all talking to others more than ever about our money and how we’re investing it. Sites like Reddit (r/wallstreetbets) have over 1M+ users discussing daily the trades they are making. Many of these individuals are even sharing screenshots of their successes. You might argue that these conversations in public forums with optional sharing of stock trades by select individuals are transparent but we disagree.
We strongly believe that greater transparency into our investment decisions is required if we are to learn from each other and become smarter investors.
What do we mean by transparency?
First, let’s discuss what we mean by transparency and what real transparency looks like. Then, let’s talk about why it matters when discussing investments. The definition is quite simple —transparency means two or more people have a complete and accurate understanding of each others’ investment decisions. This is achieved when:
- Everyone in the conversation is actively sharing…
- Every trade that they are making…
- At the cost-basis / profit-basis they are making trades, and…
- What percentage of their portfolio they are staking on the trade
This sharing also needs to conducted in a timely manner (i.e., while the trades are live) as real transparency aims to capture not only the financial outcomes of a trade but also the mindset of the investor during the time of the trade.
Most of our investing conversations conducted today in Reddit pages, Facebook groups, iMessage texts, WhatsApp threads, etc. lack one or more of these elements of transparency. Many of these channels are public. This often means a majority of the group’s members are bystanders; a small vocal minority voices their investment decisions. Even those that actively share likely do not share all of their trades and almost certainly do not share the financial outcomes associated with their trades. Similarly, in private channels like iMessages / WhatsApp threads, even with close family or friends, the same problems persist but likely due to the high friction and lack of ease in consistently sharing investment decisions.
The high cost of low transparency
Regardless of the reasons for the lack of transparency, we are faced with a troubling outcome: our investment conversations today are at best incomplete and at worst detrimental to generating consistent returns. We embellish our gains and keep private our losses. We explain our investment decisions retrospectively, pretending to have expert foresight on unpredictable markets and stocks. And as we do this, we help those listening to us form an incomplete or inaccurate hypothesis about how to invest. Worse, we convince ourselves of our own superior capabilities as investors, conveniently choosing to ignore the mistakes we’ve made. Play this dynamic out over decades and what we get is a total lack of trust in each others’ investing decision making and total lack of value generation in conversing with each other about money. This is the unfortunate world we live in today.
We built Swarm to radically change how we talk about investments with each other
We created Swarm to give the average investor (like us!) a real shot at making money in the stock and crypto markets. More importantly, we created Swarm to help us have real transparent conversations about investments with people we trust. Why? We deeply believe sharing and discussing with others our investment strategies (our wins and losses!) make us all smarter investors.
“Failure is instructive. The person who really thinks learns quite as much from his failures as from his successes.” — John Dewey
Every trade. Every time. With cost-basis and allocation percent data. Shared automatically.
That’s real transparency…and we think it is a welcome addition to the world of investment discussions. Share, discuss, and leverage the power of collective intelligence to make smarter investment decisions. Sign up today for Swarm. We hope you love it!
©Swarm Investing, Inc. 2020
Disclosures: This article reflects the opinions of only the authors who are associated persons of Swarm Investing, Inc. They are meant for informational purposes only, are not intended to serve as a recommendation to buy or sell any security, and are not an offer or sale of a security. They are also not research reports and are not intended to serve as the basis for any investment decision. Any third-party information provided does not reflect the views of Swarm Investing, Inc. Any investment information shared via the Swarm platform reflect the views of the users and do not reflect the views of Swarm Investing Inc. All investments involve risk and the past performance of a security or financial product does not guarantee future results or returns. There is always the potential of losing money when you invest in financial products. Investors should consider their investment objectives and risks carefully before investing