Tell Us How You Feel About Stocks
Twitter and its spinoffs have now come to Wall Street. They may be good at spotting trends, and trending sentiment definitely has an impact on the market. But don't confuse cause and effect.
It's not just for checking in with friends and needy movie stars anymore. Twitter and its financially focused satellites have become the digital world's ticker tape.
Twitter (http://twitter.com) spinoffs like StockTwits (http://stocktwits.com), FINIF (www.finif.com) and Stocial (www.stocial.com) have become incubators for stockpickers, and barometers of intraday trends. Okay, much of the tweet stream is market noise, or the usual misdirection from the misguided. Regardless of technology, that's never likely to change.
But there must be some value to them, because the five-year-old Twitter ecosystem and its stock-oriented forums have taken off this year. Twitter itself now counts more than 100 million active users and, contrary to the law of large numbers, another 26 million tweepers (Twitter followers) are expected to start tweeting by year's end. Tweet volume has doubled in 2011, to about a billion tweets a week�not all of which can be attributed to Ashton Kutcher and Demi Moore.
TWITTER DOESN'T HAVE a dedicated stock channel, although market-oriented blurps (also known as financial blurtings) flow from media outlets like @CNBC, @themotleyfool and @jimcramer. Financial-information providers have felt compelled to build satellite ecosystems, starting with StockTwits, which bills itself as "the best place to discover and share trading ideas with real traders in real time." It spun off from Twitter in 2009 to build its own highly graphical platform of market news, sentiment and stock-picking tools. Monthly visitors have tripled over the past year, to 100,000. More importantly, says CEO Howard Lindzon, tweets are now streaming to millions of tweeters via megaportals like Yahoo!Finance (http://finance.yahoo.com). An Adobe AIR application can pull that stream to the desktop (http://sideline.yahoo.com).
Key to the usage surge is a simple-but-elegant feature of StockTwits that lets subscribers follow conversations by ticker, not just by tweeter. StockTwits tweepers add a "$" to the ticker of the company they're discussing to their messages, making it easy to round up all the views fit to print on, say, Apple by searching on "$AAPL." Even privately traded companies, like Facebook ($FBOOK), get tags; and a dollar-sign plus ticker search on the Twitter platform pops up a stream of comments on a given stock.
Unlike personality-driven Twitter, StockTwits users don't have to pick out favorite tweeters to follow�although they can choose that alternative. Lindzon, for one, does. Members who demonstrate expertise and develop a following can make the short list under the StockTwits' Blogs tab. Tweets may be limited to 140 characters, but they frequently contain compressed URLs that pop the reader to a blog or chart on another Website for more information. StockTwits automatically shortens links for the tweeter.
Other providers, such as Stocial (www.stocial.com), have been able to stand on StockTwits' shoulders and build similar ecosystems. Still in beta and available by invitation only, Stocial's formal rollout is expected in a month. The site aggregates Web news, market data and member sentiment on individual stock tickers via member tweets on Twitter, then weighs the relevance of these inputs through natural-language analysis, a computer-generated means of understanding human language.
Stocial relies on the same "$" ticker tag as StockTwits to identify market-related content over Twitter; members can choose tweets as they stream, or select them by comment-relevance/popularity. Stocial charts price spikes against spikes in tweet volume intraday, to identify which way U.S.-listed stocks are trending.
Already online, Financial Informatics, or FINIF (www.finif.com), also compares tweets to overall market sentiment using natural-language processing. It, too, analyzes a news feed and tweets to figure out which way sentiment is trending for different stocks. FINIF, however, also adds corporate SEC filings to the mix: FINIF claims that it can ascertain the net effect of a Securities and Exchange Commission document based on certain key words and, where possible, compares the document with previous filings.
Like Stocial, FINIF charts those stocks getting the most positive and negative sentiment against a company's ticker prices. A spike on these charts suggests it could be a good time to dig down further into the tweets and news streams for more information.
TRENDING SENTIMENT definitely has an impact on the market. But don't confuse cause and effect. Stocial CEO Fahad Kamr guesstimates that about a quarter million Twitter users tweet about the market on a regular basis. That sounds like a lot, but is still only a sliver of the overall number of traders and investors in the market�and that's not the institutional sliver that controls the lion's share of volume and most influences sentiment. Except on that rare occasion when some tweeper broadcasts a piece of inside information, tweet volume doesn't wag stock volume; and tweets may or may not accurately reflect market action. But they can report events before traditional media can.
A tweeter's market acumen is definitely of interest to those wading into Twitter's stock-picking pools. But the only measure of performance is individual popularity or reputation�an indirect and rather squishy metric connected to unquantifiable factors like name recognition or cleverness. It's a far cry from a quantitative-measurement schema like the one Motley Fool has implemented for its 60,000 CAPS members (http://caps.fool.com). Any observer can quickly ascertain a CAPS member's stock-picking ability from several perspectives. But when Web researcher Pear Analytics (www.pearanalytics.com) studied the stream, it concluded that 40% of tweets are "pointless babble."
The takeaway: Tweeting trends could help inform you―but weigh specific trade advice very carefully. There may be collective wisdom in crowds, but most of us individual crowd members don't know what the hell we're talking about. That doesn't stop us from tweeting it.
Tell Us How You Feel About Stocks
Twitter and its spinoffs have now come to Wall Street. They may be good at spotting trends, and trending sentiment definitely has an impact on the market. But don't confuse cause and effect.
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It's not just for checking in with friends and needy movie stars anymore. Twitter and its financially focused satellites have become the digital world's ticker tape.
Twitter (http://twitter.com) spinoffs like StockTwits (http://stocktwits.com), FINIF (www.finif.com) and Stocial (www.stocial.com) have become incubators for stockpickers, and barometers of intraday trends. Okay, much of the tweet stream is market noise, or the usual misdirection from the misguided. Regardless of technology, that's never likely to change.
But there must be some value to them, because the five-year-old Twitter ecosystem and its stock-oriented forums have taken off this year. Twitter itself now counts more than 100 million active users and, contrary to the law of large numbers, another 26 million tweepers (Twitter followers) are expected to start tweeting by year's end. Tweet volume has doubled in 2011, to about a billion tweets a week�not all of which can be attributed to Ashton Kutcher and Demi Moore.
TWITTER DOESN'T HAVE a dedicated stock channel, although market-oriented blurps (also known as financial blurtings) flow from media outlets like @CNBC, @themotleyfool and @jimcramer. Financial-information providers have felt compelled to build satellite ecosystems, starting with StockTwits, which bills itself as "the best place to discover and share trading ideas with real traders in real time." It spun off from Twitter in 2009 to build its own highly graphical platform of market news, sentiment and stock-picking tools. Monthly visitors have tripled over the past year, to 100,000. More importantly, says CEO Howard Lindzon, tweets are now streaming to millions of tweeters via megaportals like Yahoo!Finance (http://finance.yahoo.com). An Adobe AIR application can pull that stream to the desktop (http://sideline.yahoo.com).
Key to the usage surge is a simple-but-elegant feature of StockTwits that lets subscribers follow conversations by ticker, not just by tweeter. StockTwits tweepers add a "$" to the ticker of the company they're discussing to their messages, making it easy to round up all the views fit to print on, say, Apple by searching on "$AAPL." Even privately traded companies, like Facebook ($FBOOK), get tags; and a dollar-sign plus ticker search on the Twitter platform pops up a stream of comments on a given stock.
Unlike personality-driven Twitter, StockTwits users don't have to pick out favorite tweeters to follow�although they can choose that alternative. Lindzon, for one, does. Members who demonstrate expertise and develop a following can make the short list under the StockTwits' Blogs tab. Tweets may be limited to 140 characters, but they frequently contain compressed URLs that pop the reader to a blog or chart on another Website for more information. StockTwits automatically shortens links for the tweeter.
Other providers, such as Stocial (www.stocial.com), have been able to stand on StockTwits' shoulders and build similar ecosystems. Still in beta and available by invitation only, Stocial's formal rollout is expected in a month. The site aggregates Web news, market data and member sentiment on individual stock tickers via member tweets on Twitter, then weighs the relevance of these inputs through natural-language analysis, a computer-generated means of understanding human language.
Stocial relies on the same "$" ticker tag as StockTwits to identify market-related content over Twitter; members can choose tweets as they stream, or select them by comment-relevance/popularity. Stocial charts price spikes against spikes in tweet volume intraday, to identify which way U.S.-listed stocks are trending.
Already online, Financial Informatics, or FINIF (www.finif.com), also compares tweets to overall market sentiment using natural-language processing. It, too, analyzes a news feed and tweets to figure out which way sentiment is trending for different stocks. FINIF, however, also adds corporate SEC filings to the mix: FINIF claims that it can ascertain the net effect of a Securities and Exchange Commission document based on certain key words and, where possible, compares the document with previous filings.
Like Stocial, FINIF charts those stocks getting the most positive and negative sentiment against a company's ticker prices. A spike on these charts suggests it could be a good time to dig down further into the tweets and news streams for more information.
TRENDING SENTIMENT definitely has an impact on the market. But don't confuse cause and effect. Stocial CEO Fahad Kamr guesstimates that about a quarter million Twitter users tweet about the market on a regular basis. That sounds like a lot, but is still only a sliver of the overall number of traders and investors in the market�and that's not the institutional sliver that controls the lion's share of volume and most influences sentiment. Except on that rare occasion when some tweeper broadcasts a piece of inside information, tweet volume doesn't wag stock volume; and tweets may or may not accurately reflect market action. But they can report events before traditional media can.
A tweeter's market acumen is definitely of interest to those wading into Twitter's stock-picking pools. But the only measure of performance is individual popularity or reputation�an indirect and rather squishy metric connected to unquantifiable factors like name recognition or cleverness. It's a far cry from a quantitative-measurement schema like the one Motley Fool has implemented for its 60,000 CAPS members (http://caps.fool.com). Any observer can quickly ascertain a CAPS member's stock-picking ability from several perspectives. But when Web researcher Pear Analytics (www.pearanalytics.com) studied the stream, it concluded that 40% of tweets are "pointless babble."
The takeaway: Tweeting trends could help inform you―but weigh specific trade advice very carefully. There may be collective wisdom in crowds, but most of us individual crowd members don't know what the hell we're talking about. That doesn't stop us from tweeting it.
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