Twitter: your new stock market analyst?
by Keris Lahiff
Just think Twitter is for the inane and mundane of 140 characters or less? Your folly. According to research, making stock market decisions based on Twitter’s news feed function could give returns equal to or greater than an analyst’s advice.
Timm Sprenger, doctoral student at the Technical University in Munich, found that those investors who followed stock market-related tweets, and punted on them, would have achieved an average return rate of 15 per cent. The study of 250,000 tweets over a six month-period proved there was “a striking co-ordination” between tweets about shares and what expert investors were tipping. The more reliable and valuable the information, the more likely it will be retweeted en masse.
“I don't think it is the Holy Grail to make millions but it is a very credible and legitimate source,” says Sprenger, as reported by BBC News.
Last year, Sprenger undertook a similar study into how accurately Twitter could predict the results of federal elections in Germany. He found the social networking site predicted the results within two per cent of votes tallied. In fact, Sprenger’s research into Twitter’s predictions was as accurate as research organisations conducting public surveys and expensive analysis.
“We got as close as the research institutions that spent hundreds of thousands of pounds,” he says.
Take that Facebook! You can keep people in touch but can you make them money? The irony, however, is that Twitter has in the past had long-suffering difficulties with making money within the own company.
Published on: Monday, April 11, 2011