Investors like to think they make their decisions based on cold, hard logic, but as an IRO, you understand emotions play a bigger role in the sharp ups and downs of the stock market. Both anxiety and excitement can convince otherwise rational investors to buy and sell without any warning.
Predicting another person’s internal feelings isn’t easy, but it is possible. Emerging IR technology follows the digital breadcrumbs of an investor’s online activity, translating engagement metrics into actionable insights you can leverage to deepen relationships and improve outreach.
Once you learn how to track these metrics, you’ll be able to recognize tell-tale signs that an investor is gearing up for a change.
What is Emotional Investing?
Emotional investing happens when your investor makes decisions based on instinct rather than technical analysis of the market. These instincts try to shelter them from loss and maximize their profits, which sounds good on paper. However, it usually goes about this in ways that guarantee they don’t meet either of these goals.
When the average investor sees their investment tank in value due to market fluctuations, stress and fear can convince them to sell at the market bottom. On the flip side, optimism and greed can sway an investor to invest their hard-earned cash at the market top.
In other words, emotional investing can lead to badly timed investment decisions that cost investors money. They might underperform during downturns because they sell with the herd, and spend more money when they buy in at a time when other emotional investors have driven the stock prices higher.
Buying high and selling low defies the biggest rules of investing, yet studies show many people do just that.
Market Volatility Plays on and Amplifies Emotions
Today’s volatility means shareholders may cycle through emotions on a faster, and far more unpredictable, timeline. Every day, headlines oscillate between hopeful predictions of an upswing and the panicky klaxons of a recession. Even the most committed investor may have their rational decision-making clouded by these high-octane reports on the markets.
As an IRO, getting in front of these shifting conditions can be challenging. Totally outside your control, these new conditions can make it hard to formulate an effective response to major market movements.
Many IR consulting firms recommend refining your IR narrative to position your key messaging, investment proposition, and financials front and center. Adapting your IR narrative to today’s volatile markets can help you establish your unique value.
Another piece of advice from experienced consulting firms is zeroing in on your investors. Analyzing who is (or who should be) holding your stock can help you improve your engagement efforts.
New IR Technology Gives You Greater Insight into Your Shareholders
The need for predictive tools has fuelled a wave of new IR tech to emerge on the investor relations stage. Engagement analytics are at the forefront of these IR tools, and these innovative platforms rely on AI tools to extrapolate online behavior into actionable insights.
The brilliance of engagement analytics software is its breadth of study. These IR tools aggregate engagement metrics collected across your entire platform — from your IR site to your events program and everything in between — to crunch an impressive amount of human communication, online behavior, and digital phenomena.
This aggregative power means engagement analytics software considers the full scope of an investor’s digital footprint. By including every relevant engagement metric in its analysis, it can produce a more informed view of investor behavior.
The best tools deliver these insights in a single dashboard after cleaning and visualizing this data. Once you have this dashboard, it’s easy to oversee online behavior and correlate them to ownership details and stock price.
With all this data plainly delivered on your screen, it’s easy to spot patterns, trends, and other activity that would normally be buried somewhere in your IR platform.
You can leverage this newly freed information to focus your targeting strategy. You can reach out to prized institutions that, for whatever reason, you haven’t talked to yet even though they follow your sector.
You can also prioritize engagements with primed investors you may not have noticed in the past, since this software reveals investors who follow your story and interact with your content.
Engagement analytics can also help you refine your overall IR narrative, as you can watch how each new rollout and publication performs against your stock price and peers. You can identify what resonates with investors and what needs more polish.
Emotional Investing Meets its Match in Engagement Analytics
It can be challenging to mount an effective IR strategy in the face of volatile times and emotional investing. But new technology can help you get a better bead on your current investor base and institutions who are watching your stock.
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