Mendoza School of Business

Can Twitter Predict Stock Market Moves?

Published: May 24, 2011 / Author: Len Costa

The following is an excerpt
from an article in the Institutional Investor which discusses a recent paper written by finance professors Tim Loughran and Bill McDonald.
  To read the entire article visit: Can Twitter Predict Stock Market Moves?

What happens when a 28-year-old British currency trader who previously sold a
hair care business teams up with an international trio of informatics professors
who publish an academic paper that purportedly unlocks the potential for Twitter
to predict stock market moves?

They launch Europe’s first social
media-based hedge fund, of course!

That, in a nutshell, is the
improbable story behind London-based Derwent Capital Markets, whose Cayman
Island-domiciled Derwent Absolute Return Fund began trading last week. The fund
appears to be the first to make bets based solely on sentiment analysis derived
from the microblogging platform, which celebrated its fifth anniversary in March
and, by one recent count, now produces more than 140 million messages, or
Tweets, on average, every day.



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