Remember to verify social media information used for investing

21 September 2010

| By Jayson Forrest |

Many institutional investors are using social media for investment information, but the Australian Investor Relations Association (AIRA) has reminded investors to check company sources for the accuracy of such information before using it to make investment decisions.

A survey by AIRA and Financial and Corporate Relations (FCR) of institutional investors’ and stockbroking analysts’ use of online communications showed 26 per cent of respondents use social media for investment purposes, and 15 per cent said they can access information through social media channels that they can not get elsewhere.

“Information about a listed entity generated by third parties may be seen as untrustworthy. In view of the scepticism the professional investment community has toward this type of information, we felt individual investors should also be reminded to verify social media information before making investment decisions,” AIRA chief executive Ian Matheson said.

FCR managing director Anthony Tregoning said that analysts and asset managers internationally are increasingly analysing social media channels to discern early trends towards acceptance of new consumer products, change of attitude to established brands, and dissatisfaction with the listed entities they follow.

“Australian companies are not yet using social media widely for investor relations purposes, but as more of them begin to disseminate information through social media we expect to see greater investor attention directed to these channels,” Tregoning said. The most popular social media channels used by investors were Hot Copper, Seeking Alpha, LinkedIn and YouTube. Other media being used included Wikinvest, Motley Fool, Facebook and Twitter.

The main traditional sources of investment information were company briefings, listed entity websites, the ASX, IRESS, analyst research, company emails and business media.