3 Scenarios to Consider When Innovations Go Viral

This blog discusses trading and investing news for beginners and the value of filtering information based on your financial goals. What happens when there’s a flood of information about an innovation that’s caught the market’s imagination? Even the most experienced traders and investors might find their filters and wise judgment drowned out by excitement.

It’s easy to get carried away when a product, company or service goes viral and it seems that everyone is talking about it. Before you trade or invest in viral assets though, here are three scenarios to consider when mulling the pros and cons.

1. The latest technology (that few people understand yet)

It took Artificial Intelligence (AI) project ChatGPT just five days to gather one million users, many of whom are still wondering what to do with it other than giving it the contents of their pantry and asking for recipe tips.

As entertaining as this is on channels like TikTok, ChatGTP founder Sam Altman said he wasn’t sure how his investors would be repaid and that eventually, he would be asking ChatGPT for answers to this question. Monetizing the chatbot is another matter. For the moment it’s free and Sam Altman said there might be a fee per chat in the future. Meanwhile, the AI chatbot’s costs are incredibly high, a fact that could be missed in all the chatter about how it will change the world.

AI appears to be on its way to critical mass and is being shaped by interaction with millions of people. Judging from the buzz, this is an exciting development. There’s a but though - the true potential for investors and traders might be in the future, not the present.

The metaverse and mixed reality are more examples of potentially groundbreaking technologies that could be as big as social media websites are now – sometime in the future.

The volatile history of digital currencies like Bitcoin is another good example of the uncertain path for innovative financial instruments. One question to ask is what is the level of risk with innovations like these and how comfortable are you with this level of risk?

While it’s essential to watch the developments in AI and other innovative products, as a beginner in the markets, it’s critical to remember the uncertainties.

2. The newest medical breakthrough (and incomprehensible jargon)

Announcements of medical breakthroughs seem to be followed by a flurry of experts and non-experts sharing their opinions about how medical history will be changed.

As seen during the pandemic, a balloon of misinformation and controversy floated around about MRNA vaccine delivery systems, for example. In these situations, it’s wise to make sure that the source of information truly has a background in the medical field.

Given that pharma stocks are a significant sector, each new drug has the potential to go viral, possibly because of misinformation or the public’s interest in healthcare or a combination of them both. The nature of viral news is short term, and it can have a lightning effect on stock prices which could peter out just as quickly. Evaluating the information in the context of your financial goals is a key step before taking investment actions.

3. Gurus, leaders and pop cult business figures

The impact of innovative technology and other products is magnified by gurus, leaders and pop cult business figures who have a big footprint in the mass social media. A single tweet from a thought leader or influencer can result in a wave of reactions that spreads further due to the viral nature of the web.

When everyone else pays attention to viral tweets and posts, it’s an opportunity for savvy traders and investors to focus instead on the company’s fundamentals. Few things are more revealing than the figures showing profits, losses, costs and liabilities. It’s difficult for a financial statement to go viral, and yet the information contained in it tells the bigger story of the company’s performance.

In conclusion, innovations which go viral could peter out into the footnotes of history or become the next visionary trend in the financial markets. Shaking out the nuggets of solid information might seem less exciting than catching the latest hot news, yet your bottom line might thank you in the future.

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.