Some investors may seek trading advice from their brokers. Young people consult the stars and the sky.
Stefaniya Nova, who goes by @blonderichwitch on TikTok, is a 25-year-old living in New York who uses astrology, tarot, and “intuition” to guide her day trading.
“After browsing the market from 8:30 a.m. to 9:00 a.m. and selecting the stocks I will trade that day (today it was Amazon), I draw a single card to confirm my decision or get advice,” explains- she says in a video. “Today I drew the Ace of Cups, which represents abundance; it gave me the confidence to trust my strategy.
The process seems to be working for her. On the next slide of his TikTok, Nova posts a screenshot of his portfolio for the day, showing a gain of almost $300 from trading Amazon stock. “21% come back in 8 minutes trusting my elevated self :heart:,” she wrote. In another video, she posts a screenshot of her monthly income of almost $6,000.
Nova is one of many TikTokers to attribute their financial success to their faith in the universe, touting techniques like using lunar cycles to buy Bitcoin and astrology to make $440,000 in crypto trading. This practice, while outlandish compared to the conventional strategies of sophisticated investors, sits at the intersection of Gen Z’s love of vibes and financial freedom.
“It’s a new way to make money,” Nova said Fortune. “New possibilities for people: Nowadays there is no need to work so hard. Work smarter, not harder.
Following the stars worked for Nova. She quit her job as a tarot reader and astrology consultant this year to pursue day trading, finding a more consistent income stream and earning around $5,000 a month. But that doesn’t mean it’s a good idea for everyone, one expert warns.
“In financial markets, you shouldn’t make decisions based largely on perceptions of things,” said Samuel Hartzmark, a professor of behavioral finance at Boston College’s Carroll School of Management. Fortune.
He added: “If these elements actually predicted higher returns, then many market participants would likely use them as signals in their portfolio. »
It’s in the stars
Nova shrugs at the dissidents. Some people find success in looking at market candlestick charts. She can do the same thing by looking at a deck of cards and planetary alignments.
“Everything in the world is a cycle: the stock market, the seasons and astrology,” Nova said. “As I got more interested in astrology, tarot, intuition, all of that, I saw the correlation that I’m not the only one being affected by these energetic influences.”
For example, Nova said on Friday that it would avoid making business decisions at 1 p.m. because the moon was in a void phase, meaning it was not associated with a particular zodiac sign and did not have no influence on other celestial bodies. Making decisions during these times should be avoided, Nova said. Instead, she waited an hour, after which the moon was in Virgo. After checking the market and making a tentative decision about a transaction, Nova will confirm its decision by asking itself the question: “What is best for you in your soul?”
Hartzmark, the professor, says he doesn’t condone astrology and tarot as a day trading strategy, but he understands why people are interested in them.
“The illusion of control,” he says. “Financial decisions are complicated and scary. »
Choices about money are different from other choices people make every day, he explained. The options are overwhelming, leading people to turn to any form of guidance available to gain clarity. Simplistic logic about which stocks to day trade is one way to do this, as evidenced by the theory that stock-picking monkeys may perform as well as sophisticated investors due to the inherent inconsistency of the market. You shouldn’t buy Apple stock just because you like the iPhone, for example, Hartzmark argued. Instead, stock buying decisions, especially day trading, should be based on knowing something that other traders don’t know, or on proving that the iPhone is more valuable than the price set by the market.
“A lot of fashions and moods and things like that are really just similar examples of, ‘This looks like a good story,'” Hartzmark said.
Generation Z, that is to say young people who finish their studies and find their place in the professional world, are particularly vulnerable to these trends, he added.
Ward off bad vibes
Of course, the desire to control their uncertain future is one of the main reasons Gen Z fell in love with investing. Driven by the fear of missing out and the determination to escape the corporate rat race, more than 70 percent of the generation owns stocks, according to NASDAQ, more than previous generations at the same stage of life. With apps like Robinhood at their fingertips, Gen Z also has the tools to invest cheaply and easily, catapulting them into trading sooner than older generations.
Joyee Yang, 25, a financial influencer who has over $150,000 in assets and 131,000 followers on TikTok, said: Fortune she turned to the stock market to become financially independent after being kicked out of her parents’ house at age 19, forcing her to move into an apartment with three roommates.
“I learned very quickly that, holy shit, I’m alone in this world and I either have to make more money or make my money work for me,” she said.
Yang believes he shares the attitude of many Gen Zers, who are seeking financial stability in a landscape they view as largely unstable. According to an April report from identity verification platform SheerID, only 30% of the generation feels optimistic about the economy, and more than 70% feel the need to stretch their budget or seek discounts. According to Yang, investing is one way to alleviate this panic.
“Generation Z is starting to see the light at the end of the tunnel,” Yang said. “They are not fully self-sufficient and are not required to work for every dollar they earn.”
While financial influencers like Yang have shared their investing success stories online, greater access to stock trading platforms and the proliferation of online discussions about investing have also led to a lot of misinformation. Research platform WallStreetZen found that nearly two-thirds of StockTok videos, or stock-related videos on TikTok, were misleading, according to a January report. These videos have garnered 21.5 million likes and 194 million views.
Models of the universe
But TikTok and Gen Z didn’t conjure up biased ideas about investment strategies out of thin air. There is, in fact, historical precedent for day trading wisdom based on the vibe of StockTok.
JP Morgan said: “Millionaires don’t use astrology, billionaires do.” » Even the American financier trusted the stars to guide his decisions: rumor has it that he canceled his planned trip on the Titanic at the last minute because his astrologer had warned him.
William Delbert Gann, an investor who made his fortune in the early 20th century, became famous for using astrology, ancient mathematics, and geometry to inform his business decisions. Using certain angles, Gann claimed to predict market trends and identify the ideal time to buy stocks. His paintings are still accessible today, although the validity of his philosophy is hotly contested.
“After exhaustive research and investigation of the known sciences,” Gann said in a 1909 interview, “I discovered that the law of vibrations enabled me to determine with precision the exact points at which stocks or commodities should rise and decline within a given period of time.”
If you look at the correlation between the decline in the Dow Jones Industrial Average and total solar eclipse days, you might – for a moment – forgive Gann for his eccentric ideals. According to an Axios analysis, during or shortly after five of the seven total solar eclipses visible in the United States since 1932, the Dow Jones fell. Of course, there is another, less optimistic explanation: The economy is often affected by eclipses because people travel to attend the event, disrupting usual travel and spending behaviors.
Hartzmark is still not convinced of Gann’s dogma. Guys like Gann are sometimes doomed to success, he said, simply because the base success rate of day trading is so low to begin with. A 2004 study that Hartzmark still cites, by researchers at the Graduate School of Management at the University of California at Davis and National Chengchi University in Taipei, Taiwan, found that of 130,000 individual investors, more 80% lost money in this practice. . The few people who made money didn’t do it consistently.
With the probability of success in day trading already so low, one cannot simply attribute success to sophisticated investment strategies, Hartzmark argued. Part of this will be luck and circumstance. For the few people who get rich and rely on unconventional strategies to get there, it’s easy to attribute wealth to that. This is a phenomenon that has existed for hundreds of years.
“The psychology here is nothing new,” he said. “The way it manifests is a little different because of technological changes and things like that, but I don’t think Gen Z deserves a bad rap.”