Echo Chambers: How They Hurt Returns, and the Benefits of Diverse Perspectives in Research

DATE: Wednesday, March 29th, 2023
LOCATION: CFA Society Baltimore On-Demand Webinar

CFA Society Baltimore is a non-profit professional society that has been a point of connection for the Baltimore investment community since 1948. The Society provides an open forum for the exchange of fresh perspectives on industry issues and promotes ethics and integrity. Learn More


Actively seeking diverse viewpoints may improve returns when investing in stocks. Investing according to an “echo chamber” that reproduces and reinforces prior opinions, however, can severely drag on performance. New research by Joey Engelberg, Will Mullins, and J. Anthony Cookson shows investors tend not to seek information that challenges their perceptions. Instead, they choose to disproportionately consume information from other investors who share their beliefs.


Joseph Engelberg has served as Chief Research Officer of Counterpoint Funds since 2015. Dr. Engelberg has also been an Associate Professor of Finance at…

Michael Taylor has overseen key/national accounts and institutional client relationships at Counterpoint Funds since 2020…


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We find evidence of selective exposure to confirmatory information among 400,000 users on the investor social network StockTwits. Self-described bulls are 5 times more likely to follow a user with a bullish view of the same stock than self-described bears. Consequently, bulls see 62 more bullish messages and 24 fewer bearish messages than bears over the same 50-day period. These “echo chambers” exist even among professional investors and are strongest for investors who trade on their beliefs. Finally, beliefs formed in echo chambers are associated with lower ex-post returns, more siloing of information and more trading volume.

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