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Our cover story this month covers the vexed topic of

social media, something which has been bubbling

away in the junior resources sector for a few years

now. There are currently tens of thousands of traders
discussing ASX stocks on social media platforms

such as Twitter, Facebook and Reddit, representing

an entirely new investor class for junior miners.

owever, it comes with complications as well as opportunities “pump-and-dump” tactics in an attempt to manufacture certain
Hand the vast majority of the industry is still coming to terms outcomes.
with how to deal with this online community. So, where the conventional investor can rely on experienced,
Can companies ignore the online space and carry on with sober analysis by a broker’s in-house experts, the online trader
business as usual or should they embrace the new opportunity inevitably heads to Twitter and other platforms where they follow
and tailor their investor marketing to the dynamics of social me- threads and identify with traders who they see as successful
dia? (the classic social media “influencer”).
It is a dilemma every industry and public organisation has had The problem is, there is no regulation in the space; online trad-
to tackle to some degree in the last decade. For some organisa- ers with followings of several thousand are free to post what they
tions and institutions, the influence of social media came much wish. Most are doing nothing illegal or nefarious but there are
earlier but it feels like 2021 is the year in which social media has plenty who are.
truly impacted the resources sector, at least the trading part of it. ASIC and the ASX have belatedly entered the fray, but you
There are two elements to the trend – online trading and social only have to look at other industries to see how difficult it is to
media. The first is part of a wider digital revolution, one where even monitor, never mind quash, illegal or dubious online activ-
the middleman, agent or broker is eliminated in favour of direct ity.
contact between customer and service provider. This process All of this is not to say that the phenomenon is a wholly unde-
has already occurred in other service areas – think Uber, Airbnb sirable thing. There are plenty of companies who’ve found new
or I Know the Pilot – so it was only a matter of time before it investors and new audiences by embracing the trend. The chal-
transferred to share trading. lenge comes in managing this disparate group.
It could be described as a democratisation of trading. Where Most are traders who will move with market sentiment and as
the traditional investor is higher income, plus-40 years old with ever, the relationship between junior company and day traders
either a strong understanding of market dynamics or a stockbro- has always been a double-edged sword. Companies welcome
ker who does, anecdotal evidence has the new online trader as the volume day trading delivers but it makes it very difficult to mi-
an under-40 individual (usually male), working from home due grate towards more long-term investors when your share price is
to the pandemic who is comfortable undertaking transactions fluctuating on an hourly basis.
online and has a strong appetite for risk. The online space only amplifies this juxtaposition.
The problem is, while they may be digital savvy, their knowl- Perhaps when the lockdown ends, we will see a return to
edge of financial markets is weak. Most wouldn’t have even more traditional forms of marketing and investor relations. While
thought about trading pre-COVID. However, trapped at home everyone has become adept on giving online presentations and
with surprisingly high levels of disposable income and no foot- conducting meetings over Zoom, Teams or Webex, there is little
ball, basketball or even racing to bet on, they found the only doubt video communication still has something missing.
outlet available – the market. The evidence was certainly at the Australian Nickel Confer-
And, like the betting apps which proliferate now, trading plat- ence on October 5. The near 500-strong crowd was the largest
forms make things easy. They eliminate the need to go through in the event’s 27-year history, proving that when available, in-
an intermediary, your investment can be instantaneous. person contact is still preferable.
Removing the broker from the transaction however means no Any number of people may be logged into an online presenta-
expert advice, leaving traders desperate for any bit of knowl- tion, but it can still be very difficult to judge engagement. In a
edge they can find. physical conference setting, an executive can see the retiree in
As the story points out, there has been a massive proliferation the fifth row is falling asleep, bump into an old colleague who
of threads, chatrooms, forums and discussion boards covering has a new venture or meet the new investor who can change
junior miners and explorers on all social media platforms in re- the company.
cent years to fill this knowledge void. For all their influence, Twitter, Zoom and the digital world will
However, as with all forms of social media discussion, the fi- never be able to replace those chance conversations.
nancial platforms can be a place of vitriol, conspiracy theories,
narcissism and misinformation as well as knowledge. Some us-
ers post personal threats to management, while others employ dominic@paydirt.com.au @DominicPiper

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