Applying Social Media to Securities Analysis-Bizzare or Useful?

The definition of a Social Sentiment Indicator consists of a measurement of social media, aggregated from various sources (e.g. Facebook, Twitter, Instagram, etc. and/or any social media platform), that registers positive, negative or neutral feedback, to enable businesses, celebrities, influencers or anyone that has social media followers, to understand their performance, what they are doing right or wrong, what is liked or disliked and if their followers are happy, disappointed, angry or pleased [with it, them or a particular action, event or policy]. Different social media platforms and companies can and will score this Social Sentiment Indicator differently, but importantly, a Net Sentiment numerical score, or Net (Social) Sentiment Indicator, can be solved for, to indicate a positive or negative for that which (or who) is being measured. But would this be a useful tool if it were applied to financial instruments in the securities markets? If this Net Sentiment Indicator was quantified with granularity, scale and relativity, we think yes. To achieve accuracy one would also need the source data to be utilizing relevant sources (e.g. Seeking Alpha, Stocktwit, TheStreet, etc.) and an objective scoring system. With a Net Sentiment Indicator that meets the aforementioned criteria, we hold that it could be very valuable for securities identification and securities analysis, in particular when considered in conjunction with other quantitative and qualitative analysis. It could even be a leading indicator to telegraph money flow, for not only securities and commodities but also group and sector rotation. Applying the data in the context of visualization could make this indicator even more valuable, with graphs, charts histograms, stochastics, etc. We are developing the utilization of these indicators to apply them to our process of securities identification and analysis. In fact, we recently applied this to our process for one of our securities screens and the results were more than compelling. Quantitative analytics of a qualitative nature. We believe this kind of creativity not only drives results in an operating company, but also the potential to capitalize upon unforeseen investment opportunities.

David N. Baker

By |2018-06-02T04:01:02+00:00May 24th, 2018|blog|0 Comments