Using Twitter to Predict The Market

[zengrifter]

Using Twitter to Predict The Market

Source: Catalyst House Blog | 1-6-11



Many expert traders claim to know how to predict whether the market will rise or fall at any particualr time. But there are few, if any, who can actually do it consistently better than simply tossing a coin.

For many economists that’s easy to explain. Conventional economic theory (ie, Efficient Market Theory) holds that the movement of prices in a perfect market should follow a random walk and should be impossible to predict with an accuracy greater than 50 per cent.

But the efficient market hypothesis no longer holds water because numerous studies have shown that stock market prices are not entirely random and may very well be tied to mass psychology and related factors. If so there may be a way to gauge the mass consciousness for predictive signs.

Researchers at Indiana University say they’ve found just such a predictor buried in the seemingly endless chatter that emanates from the Twitterverse.

MORE- Catalyst House Blog

[zengrifter]

Twitter mood states tracked in research >>

[zengrifter]

A new British hedge fund in planning to track Twitter in order to attempt to predict the direction of the stock market. An exclusive deal has been signed with Dr. Xiao-Jun Zeng, a doctor of computer science at the University of Manchester, to research trading models. zg

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Hedge Fund Will Track Twitter to Predict Stock Moves

Oct. 20 (Bloomberg) -- Johan Bollen, an associate professor of informatics and computing at Indiana University, talks with Bloomberg's Lisa Murphy about his research into sentiment on Twitter Inc.'s social-networking site and how that correlates to stock market performance. (Source: Bloomberg)

The Derwent Absolute Return Fund Ltd., set to start trading in February with an initial 25 million pounds ($39 million) under management, will follow posts on the social-networking website. A trading model will highlight when the number of times words on Twitter such as “calm” rise above or below average.

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'Twitter' Hedge Fund Delays Launch

Jan 25 (CNBC) Hedge fund Derwent Capital Markets says it has delayed the launch of its closely-watched "Twitter" fund due partly to higher-than-anticipated interest from clients—largely the result of international media attention the small eight-person boutique investment firm has received in recent weeks.

Derwent originally planned a February launch date for its Absolute Return Fund, which will base its holdings and strategy on data mined from Twitter, but it is now targeting a more realistic April 1 timetable. Between now and then, the fund will make changes to its custodial operations and look to engage in additional fundraising.

[zengrifter]

"I'm Not Sure What Joke to Make of it," says Pascal-Emmanuel Gobry at Business Insider:
"Finally a business model for Twitter? A sure sign of a bubble? But where? On Twitter? Or on the stock market? Or both?"

[DDutton]

"I'm Not Sure What Joke to Make of it," says Pascal-Emmanuel Gobry at Business Insider:
"Finally a business model for Twitter? A sure sign of a bubble? But where? On Twitter? Or on the stock market? Or both?"

Too funny!