By |Published On: May 25th, 2012|Categories: Research Insights, Behavioral Finance|

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 Gray, PhD

Wesley Gray, PhD
After serving as a Captain in the United States Marine Corps, Dr. Gray earned an MBA and a PhD in finance from the University of Chicago where he studied under Nobel Prize Winner Eugene Fama. Next, Wes took an academic job in his wife’s hometown of Philadelphia 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 firm dedicated to an impact mission of empowering investors through education. He is a contributor to multiple industry publications and regularly speaks to professional investor groups across the country. Wes has published multiple academic papers and four books, including Embedded (Naval Institute Press, 2009), Quantitative Value (Wiley, 2012), DIY Financial Advisor (Wiley, 2015), and Quantitative Momentum (Wiley, 2016). Dr. Gray currently resides in Palmas Del Mar Puerto Rico with his wife and three children. He recently finished the Leadville 100 ultramarathon race and promises to make better life decisions in the future.

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