Apparently following and measuring internet chatter may have predictive abilities in the movement of stocks according to a post by The Daily Stat
Researchers were able to do 7.9% better than the S&P 500 stock index by (virtually) investing in brands that generate high volumes of online chatter. In studying four years' worth of product reviews of 15 brands, Seshadri Tirunillai of the University of Houston and Gerard J. Tellis of USC's Marshall School found that sheer volume of reviews and negative chatter have a strong predictive relationship with stock returns; positive chatter and five-star ratings have no predictive value. The stock-return effects are rapid but not immediate: They follow bursts of user-generated comments by a few days, the researchers say.
Do you think this is a legitimate strategy and would you try it? Perhaps a new arsenal for technical analysts?
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