The Death of Twitter Trading?

The Death of Twitter Trading?

May 25, 2012 Research Insights, Behavioral Finance
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(Last Updated On: January 24, 2017)

Almost a year ago, we posted a few articles on strategies focused on using Twitter as a mechanism to trade stocks. Our basic conclusion was “BS!”

Here are the original articles:

And an original quote:

In my mind, this sort of analysis [trading on twitter] is akin to my dad’s stock trading rule of thumb: If the Dallas Cowboys win the Thanksgiving Day football game, the market will be on a tear; if they lose the game, the market will suck wind the next year. He swears by it,but unfortunately, my limited inheritance is invested in this strategy–aye carumba.

Anyway, my main takeaway is that using mood to predict stock prices doesn’t pass the sniff test, and yet, the financial blogosphere went crazy when this paper was released and a couple of folks raised a $100mm for a hedge fund. Amazing.

A recent Financial Times articles puts the nail in the coffin for “Twitter Traders.”

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About the Author

Wesley R. Gray, Ph.D.

After serving as a Captain in the United States Marine Corps, Dr. Gray earned a PhD, and worked as a finance professor at Drexel University. Dr. Gray’s interest in bridging the research gap between academia and industry led him to found Alpha Architect, an asset management that delivers affordable active exposures for tax-sensitive investors. Dr. Gray has published four books and a number of academic articles. Wes is a regular contributor to multiple industry outlets, to include the following: Wall Street Journal, Forbes, ETF.com, and the CFA Institute. Dr. Gray earned an MBA and a PhD in finance from the University of Chicago and graduated magna cum laude with a BS from The Wharton School of the University of Pennsylvania.