Stocks, memes, and desperation capitalism: an ethnographic case study of r/WallStreetBets

Increased availability of digital technologies, such as consumer-level investing platforms, have democratised the financial services industry. Similarly, social media has provided a new forum for retail investors, individuals who are investing without institutional support, to find and share financial advice. Against the backdrop of institutional distrust spurred by the 2008 economic crisis and the COVID-19 cost-of-living crisis, retail investors increasingly turn to investment communities on social media, viewing the stock market as an escape from financial uncertainty. Though prior research has demonstrated that investments made based on information provided from social media largely results in losses, online investing communities, most notably r/wallstreetbets, have continued to attract new users. In this thesis, I demonstrate how social media influences the behavior of retail investors and explain why they are drawn to social media investing communities despite the high likelihood of incurring losses. To conduct this research, I undergo an ethnographic case study of r/wallstreetbets, an online investing community hosted on Reddit known for anti-institutional meme culture and high-risk investment advice. The results demonstrate that users prone to economic biases have their vulnerabilities amplified by social media. Anti-institutional sentiment spurred by lingering resentment for institutions and their role in creating economic crises causes users to trust unregulated information on social media over the regulated advice provided by banks. The investment advice on social media incentivizes users to pursue unnecessarily high-risk trades, exemplified by ‘YOLO trading’ commonly seen on r/wallstreetbets. This culminates in a theory of desperation capitalism, describing why young people feel forced to adopt high-risk money-making strategies to escape financial precarity. The findings of this thesis can help policy-makers, institutions, and academics understand what draws retail investors to social media for advice, resulting in better strategies to mitigate the impacts of dubious online investment advice

In Tok We Trust – Exploring Social Media’s Role in the Worlds of Retail Investors and Institutions

The dual trends of retail investing and social media’s role as a channel for investing advice are on the rise. The objective of this study is to determine the forces that shape retail investors’ trust (or lack thereof) in financial institutions, and conversely the forces that shape trust in social media platforms and content creators as alternative sources of financial and investing advice. Understanding retail investors’ behaviours and perceptions toward these sources of investing advice sets the foundation for retail investors to be more informed and equipped with areas of further exploration in the current and future investing landscapes. This study approaches the research objective through a combination of primary research with retail investors who leverage social media as a source of advice, a supplementary literature review to explore emerging themes and perceptions further, and a foresight exercise which illustrates alternative futures and alternative ways in which key signals of change evolve. Following the analysis of findings for each methodology and subsequent synthesis, this study identifies that financial institutions face less of a crisis of trust, but more so one of faith in favourable outcomes. Institutions must grapple with (particularly younger) retail investors’ lack of faith that the perceived-general level of advice, combined with the cost of services, will facilitate their wealth goals. Social media platforms are not seen as necessarily more trustworthy, but more capable of delivering timely, targeted advice to retail investors. Signals of change in the financial industry and marketplaces point toward hyper-personalized investing services, aggressive increases in personal financial data sharing and segmentation to deliver services, and a pronounced emphasis on ESG-forward investing options. In futures where ESG-related advice is orchestrated and better standardized, social media-delivered advice stands at risk of obsolescence in the face of more empowered and surgical retail investors