Posts Tagged ‘NASDAQ’

Can Social Media Comments Move the Financial Markets?

Wednesday, October 7th, 2009

By Kwasi Fraser

What if we can actually speak things into existence? Like say, let there be light and then the sun fills the sky. Well, today we are witnessing a collective voice online, I call it the voice of humanity that comes close to speaking things into existence. This collective voice is currently moving products, services, brands, and a multitude of issues on the social web. So, the social web has provided the platform for all humanity to freely engage in the exchange of thoughts and ideas about any given topic.

Typing a simple query on a social media search engine like www.sampoint.com will deliver individual comments that make up this collective voice of humanity online. However, it is yet to be seen if and how this collective voice is able to move the financial markets, stock by stock.

As an investment professional with over 15 years of investing in stocks and various derivatives, I am witnessing the ability of this collective voice online to influence the direction of financial securities. In the mid to late 1990’s we witnessed how mass emails and faxes about Over the Counter securities (i.e. Penny Stocks) were able to produce significant short term gains and losses.

Today the authors of those emails and faxes are establishing their presence on the greatest publishing platform in the world; the social websites, and message boards. These authors are joined by many other individual and professional investors voicing their thoughts and ideas about targeted financial securities and other investments. Samepoint’s Universal API enable companies to create customizable dashboards to enable individual investors and financial professionals like myself to track and trend current and historical comments on various securities to identify any correlation with stock price and volume changes to gain from any arbitrage opportunities.

With the stock options market being predominantly driven by volatility, the ever changing sentiment and frequency of comments may very well be a crucial component in predicting volatility on any given financial security. The team at Samepoint (www.samepoint.com) is partnering with our users in academia and the financial sector to research and identify any such correlation.