How does one profit from Twitter? You could buy the stock and hope it increases in price or makes a profit allowing it to pay a dividend. Or, you could do what Tashtego is doing, and use it along with other social media to speculate on the US equity markets.
Tashtego, backed by early Twitter Inc. investor Spark Capital, plans to raise a fund that will use consumer sentiment and trader behavior from social networks to bet on and against U.S. stocks, said Chief Investment Officer Arthur Mateos. The Boston-based firm’s Social Equities Fund, which relies on algorithms, is expected to eventually reach $1 billion in capital, the 45-year-old said.
Using social networking site is not a new idea, but using them for equity markets is still fairly novel.
Social investment networks have grown in popularity along with broader sites such as Twitter. They started in the middle of the last decade, mostly within foreign-exchange markets, and later expanded to stocks. Before setting up the stock fund last year, Tashtego started a foreign-exchange pool in 2013 to trade based on data from social networks, [Chief Investment Officer Arthur Mateos] said.
What do you monkeys think? Is this a fad or a trend? Would you consider investing with a hedge fund that had this kind of strategy? Would you consider working for one?
Any data out yet on the actual returns they are generating? I've heard of these for several years now, curious how reliable the signal/noise ratio is and how they might be able to measure sentiment...
Sounds like they are going more granular to the individual stock level.
Cool :-)
is this something like stocktwits?
"...is expected to eventually reach $1 billion in capital, the 45-year old said."
Yeah I also expect to earn 1000% returns annually for the next 32 years.
But to answer your question, fad. You definitely don't have the consensus view from tweets, so one way or another you're going to get skewed sentiment from tweets based on the user base. Sure Icahn may use twitter every now and again, but I would imagine most $ tag twitter volume is a bunch of uninformed parents who don't have any background and over the universe of stocks out there, probably has 0 correlation to actual stock performance.
Remember this:
http://www.zerohedge.com/news/2014-11-24/twitter-hedge-fund-manager-ant…
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