Before getting into the main topic its worth reminding ourselves what happened in Q1 of 2011. The first quarter of 2011 has been a strong one for stocks which is something of a conundrum to my way of thinking. I mean on the downside there was trouble in the Middle East and Africa; earthquake, tsunami and atomic problems in Japan; oil prices driving inflation; house prices weak and no agreement on the US federal budget…..on the upside unemployment appeared to be falling.
Okay so where does Twitter come into this? A recent study conducted byPhD student Timm Sprenger at the Technical University of Munich found that investors following stock market tweets could have achieved an average return rate of 15%.
Timm analysed 250,000 tweets sent over a six-month period. He discovered “a striking co-ordination” between what Twitter was saying about shares and other information from investors and analysts.
“I don’t think it is the Holy Grail to make millions but it is a very credible and legitimate source,” he said.
Timm also found that more valuable information was retweeted, meaning that it reached an even wider audience. Timms PhD researchformed the basis of the website TweetTrader.net where the real-time sentiment for individual stocks can be accessed. The site is currently in beta.
During federal elections in Germany last year. Using Twitter, Timm was able to predict the final results to within 2% for each political party. “We got as close as the research institutions that spent hundreds of thousands of Euros,” Timm said.
Maybe I will start following some financial Tweeters and pay more attention to what is being Tweeted…
