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New Twitter-Based Hedge Fund Beats the Stock Market
nonprofiteer writes "Derwent Capital, a new hedge fund that makes trades and investments based on Twitter sentiment, beat the market — and other hedge funds — in its first full month of trading. From the Atlantic: 'Using an algorithm based on the social media mood that day, the hedge fund predicted the market to make the right trades. Sounds unbelievable that something cluttered with mundane musings and media links could have anything smart to say about the market. But it's working so far.' Blind luck?"
Twitter may have finally found a way to make a profit!
If what I just said sounded like a troll, it was probably just a failed attempt at humor.
It beat the market for one whole month? Wow! That puts them in the same class as 50% of high-school finance students!
Show me the three year and I might start to be impressed. If it doesn't go broke in 10 years, then I might take it seriously. A random pick of stocks has a non-negligible chance of beating the market as a whole in a single month.
I think twitter will have the same effect as a monkey throwing darts...
http://www.automaticfinances.com/monkey-stock-picking/
They did better than average for one month. I could buy a random subset of stocks, and still have a 50% chance of beating the average. Call me if they can maintain this for 12 months straight. Then maybe they can see some of my money.
Sounds like the theory from the movie "Limitless" put into practice.
So by following Twitter trends he can make investments that beat other funds in the short run? Are we supposed to be even remotely surprised here?
Everyone knows the stock market responds faster to fear and to delusions of sudden prosperity than to hard data; that's a large part of its problem.
Detecting and exploiting those fears and delusions accurately is a good trick (and I'm sure it isn't easy, even with this method). But it doesn't make the man a genius by a long shot. Nor does it make him a useful investor: banking on the current "mood" means he's actually inflating the dangerous cycles of emotionally driven, short-term investment decisions rather than making any kind of long-term decisions.
I've been ripped before for criticizing short term trading, including HFT trading, but I still think the people who keep the market even remotely stable and the people who make the market useful for it's true purpose (giving corporations a bond market and investors a place for potentially stable returns) are long term investors who follow the data.
And following twitter isn't what I mean by data-driven decisions.
I wonder how the twitter fund is doing with the sudden 500 point drop in the Dow this morning...
He knows the movie idea has limitless potential, but he just wants to know what the name of it was.
This is my footer. There are many like it, but this one is mine.
You might be interested in the lead, steel, and cordite portfolio if your tinfoil hat is on that tightly.
Oh from the fact it was $300 an ounce not too long ago and it goes up to $1600! Why? Buy low sell high is what I pulled out of my anus. The whole gold thing reminds me of real estate investment. I have seen it before and seen family members lose their life savings flipping houses when the bill comes due and the rates reset.
Once the recession recovers and people start buying stocks and bonds again the value of gold will plumbet. My father had a friend who in 1980 bought it and lost 80% of his money. Even if he held on today he still would not break even until it would hit $1800 an ounce after adjusting inflation.
Gold is very volatile and inconsistent as it can go in either direction very very fast and takes decades to swing back. It wont hit $6000 my friend.
http://saveie6.com/