Bridge over ocean
1 January 2000 Financial Analysts Journal Volume 56, Issue 1

How “Foolish” Are Internet Investors?

  1. Mark Hirschey
  2. Vernon J. Richardson
  3. Susan Scholz

We offer the first systematic evidence that stock recommendations published on the Internet move prices and trading volumes. We found that buy announcements for small-cap growth stocks published in the nightly performance recap of The Motley Fool's Rule Breaker Portfolio engender statistically significant abnormal returns. The effects were generally larger than those following secondhand buy recommendations published in the print media or after a stock purchase recommendation on the television program “Wall $treet Week.” Our finding of unusual trading volume also provides evidence consistent with the hypothesis that The Motley Fool buy announcements are closely followed and acted on by Internet investors.

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