By CultureBanx Team
- There are around 250 stock symbol pairs where the possibility of confusion is particularly high
- Undoing the trades costs at least $1.1M in yearly transaction fees for the most affected pairs
Stock Ticker symbols can be confusing to the novice investor, especially when there are thousands of companies listed on U.S. stock exchanges. People are making mistakes left and right when buying shares and they are paying for it heavily in transaction fees and embarrassment when they have to undo the trades.
Why This Matters: Let’s get into some notable ticker travesties! “FORD” (FORD +1.74%) is the ticker symbol for “Forward Industries,” a medical monitoring systems case manufacturer valued at about $10 million. It’s not the $40 billion Ford (F +0.77%) car company that trades under the ticker symbol (F). For all you social media investors be aware that “TWTRQ” is a bankrupt home entertainment retailer whose stock spiked 1000% in 2013 after Twitter (TWTR +0.70%) went public under ticker symbol “TWTR.”
More than half of listed U.S. companies share a “meaningful part” of their names or tickers with another firm
Professors at the Rutgers School of Business-Camden found more than half of listed U.S. companies share a “meaningful part” of their names or tickers with another firm. There are around 250 company pairs where the possibility of confusion is particularly high, and 25% of them showed statistically significant similarities in trading patterns that can only be explained by cases of mistaken identity, according to Quartz.
Undoing the trades costs at least $1.1 million in yearly transaction fees for the most affected pairs. On top of that, it takes around a week for the effects of mistaken trades to fade away.
Situational Awareness: Even big institutions that rely on algorithms to watch for big movements in stocks often get confused and dump money into the wrong companies. If you’re a basement day trader, or buying stocks at a hedge fund, the responsibility falls squarely onto investors to “spellcheck” their holdings in order to protect their coins.
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