The role of social media in investing has gone from “interesting additional info” to “critical data.” Investors can take a cue from several hedge funds that are using Twitter to glean information that can help them make money.
It can be as simple of trying to understand what the masses (public) think about a company to much more complicated analysis.
The Volume Problem
As important as this information can be, the average hedge fund – not to mention the average investor – can’t follow the 500 million tweets per day that are posted on Twitter. Disrupters have entered the game via complicated computer programs that are designed to look at and analyze millions of tweets in real time for useful information.
More importantly, this software makes the information it finds relevant including who is posting, what they are posting and the context of what is being posted. This is all important because to do less would provide nothing more than a stream of tweets on a certain topic.
Information is important. Timely information is priceless. If an investor can find out that – for example – a terrorist attack has taken place or that consumers are talking critically (or positively) about a product that information can help with decisions to buy or sell stock.
The information alone is not a guarantee that money-making decisions will be made but studies have shown that without this information, more bad decisions have been made. All this contributes to the notion that information from social media is an important part of the investing process.
Predicting Market Movement
Receiving groundbreaking news before it breaks in the mainstream media is one way to stay ahead of trends and the market. News of the death of Osama bin Laden is one area where media such as Twitter broke the news first.
In addition to breaking news, just keeping up with trends, industry developments and other types of information can provide an edge. So can the use of social media to predict market movement based on interest or sentiment in a particular area.
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FinanceBoards And Social Media
FinanceBoards has ready-built dashboards and widgets designed to collect a variety of social media data and put it all in one place for you, the investor, to use. This happens without the need to log in to various systems and analysis sources.
Widgets include a social news and ideas chart and Facebook SEO data. Dashboards highlight web and social data stock data, web traffic, Facebook popularity, social sentiment, no. of app. downloads and more.