In the last months we have been strongly exposed through the media to the so-called “meme stocks” and to the, at least assumed, fight between retail traders and professional short sellers like hedge funds. Apart from the social and ethical aspects that have been debated with regards to short selling and short squeezing, which are very interesting, it is also interesting to reflect on the influence that the media coverage on meme stocks can have on our investment decisions.
The exposure mostly to (temporarily) successful stories can be seen as a survivorship bias that limits the data flowing into our mental processes. This in turn could activate the representativeness heuristic studied by Nobel prize Kahneman and his colleague Tversky.
Which thoughts go through our head when we see stock performances like those of meme stocks? Which feelings does this produce and how do they influence our behaviour?
Italian-speaking readers can also check out the extended version of this blog article on LinkedIn.