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Category Archives: Analytics

3 Ways Social Media is Changing Investing

3 Ways Social Media is Changing Investing
By Chris Camillo



Over the past decade, being social media savvy has become a prerequisite for building a successful brand. Now, social media is also changing how investors monitor emerging trends and make decisions on which companies they want to invest in. Data and analytics gathered from online blogs, forums, and social media channels such as Twitter and Facebook take the real-time pulse of the investment community and give direct insight into emerging market trends, products gaining traction and more. This form of early knowledge empowers investors to make new discoveries, validate a potential investment and create a network of like-minded investors.
 

 
Here are three ways social is impacting finance and investing:

1. Online investment forums 2.0

There are several social media platforms and micro blogging networks connecting investors with each other and giving them a platform to access critical information in one place. The discussion boards at Yahoo! Finance and Motley Fool have been mainstays for years, but new outlets such as StockTwits are quickly taking over the space and have the potential to replace standard sources of financial chatter.  While using StockTwits, you can search for top investing pros, follow them, collaborate and quickly scan trending stocks or mine chatter related to the stocks you already own.

2. Social financial chatter analysis

Technology has made it possible to aggregate and analyze real-time streaming financial chatter across a multitude of investment forums, blogs and microblogging networks to generate a stock’s buy/sell rating based on “sentiment.” Sentiment reflects how investors feel about a particular publicly traded company. This process is called financial chatter analysis. HedgeChatter, a financial chatter analysis startup (of which I am an investor and board member), is one company that aims to turn financial chatter into a reliable financial insight tool for investors. Advanced algorithms track interactions and measure how many people are participating, who is talking, whether the discussion is positive or negative, and each person’s level of influence or historical “sentiment correctness” for the particular stock being discussed.

The resulting insights and data provide a real-time snapshot of what influencers are saying about a particular stock, and the degree of weight an investor should place in their opinion. A great example is Carl Icahn—a notable, if not controversial, investor whose tweets about Apple and eBay have become market movers in and of themselves. Social chatter analysis is becoming more accepted by institutional investors and will make its way to the mainstream in the coming years.

3. Social information arbitrage

Simply put, social information arbitrage is diving into unstructured conversations and trending topics in order to identify meaningful and tradable information that has not yet been curated and published for consumption by outside the traditional financial establishment (e.g., Wall Street). For example, it was “mommy bloggers,” not Wall Street analysts, who were first to foresee record holiday demand for the newly launched Leap Pad Explorer educational children’s toy in 2011.  That single new product launch fueled an unexpected jump in year-over-year sales at publicly traded LeapFrog Enterprises, rewarding investors with triple digit returns.  At the time, the company was only trading for $3 a share and had not made any waves in the news cycle for several years. Although mommy bloggers have no affiliation to the financial world, savvy investors tuned into this community would have benefited greatly.

Chris Camillo, a pioneer in social information arbitrage investing, is the author of Laughing at Wall Street (St Martin’s Press, 2011). In 2006, he leveraged social information analysis to invest $20,000 in the stock market, and in just over 3 years, grew it to more than $2 million. He is a regular speaker on the real and perceived predictive effectiveness of social chatter on public securities markets and its role in investment analysis.

The True Social Power of Reddit AMAs (Ask Me Anything)

The True Social Power of Reddit AMAs (Ask Me Anything)
By Asher Feldman

Forget late night talk shows, long form magazine profiles where the reporter explains what you’re eating or those daytime panel free for alls — the best way to get your message to the people these days is simply by sitting behind the keys of a computer.

Celebrities (and their publicists) have come around to utilizing Reddit, “the front page of the internet,” as a key stop on promotional tours. With more than 16 million unique users each month since October, it’s no wonder. And bringing your big name to the question and answer forum subreddit r/IAmA and its more than 5.2 million subscribers offers A-list-celeb exposure potential.

But how useful is Reddit as a promotional tool, really?

Does answering whether you’d rather face 100 duck-sized horses or a singular horse-sized duck get you the bang for your buck (or your typing time)? Using social analytics, we can determine just how powerful Reddit has become as a platform for promotion — oftentimes to the chagrin of the most devoted Reddit users.

General Sentiment focused in on a sample of 19 of the site’s most popular AMAs (Ask Me Anything) from March 15 to April 15. From movie stars like Harrison Ford to World War II vets to authors and professors, some of the top-rated AMAs since mid-March have proved just why the AMA is such a popular forum — you can learn anything about anyone who offers themselves up.

Using the General Sentiment social analytics platform, we compared both overall volume of media mentions across the social web and tonality of the conversation regarding the subjects of the 19 AMAs to measure how well spent time on Reddit is. And the answer seems clear — it’s totally worth it.

Of the 19 AMAs, the subject of the AMA saw their overall media mention volume grow by more than 174 percent on average during the day of their AMA and the next two days compared to the month leading up to the AMA.
 

 
None saw a bigger bounce than “Hellboy” creator Mike Mignola, whose mentions jumped by nearly 600% after answering questions about discussing multi-legged nightmare creatures with Guillermo Del Toro and his Batman covers.

Comedian Hannibal Buress saw a similar bounce after he explained to the assembled Reddit crowd that his mom wanted to name him Louis and discussed whether or not he was a “juice comic.”
 

 
But it’s not only volume of chatter that goes up — bringing your message to the people also raises your status with the people of the web. By measuring sentiment during the same time frames, General Sentiment calculated that average sentiment for the 19 participants went up by more than 30 percent when comparing the before and after AMA time periods.

“Game of Thrones” star Peter Dinklage saw a 102 percent sentiment bump in the days following his well-received Reddit AMA, where he discussed his lack of a hairbrush and his love of hummus. Meanwhile former “Jeopardy” champion Ken Jennings saw a 140 percent increase in sentiment after he named his dream Jeopardy contestant panel.

Understandably, all of these AMAers had something to promote, so while the correlation between volume and AMA appearances is convincing, it is not as verifiable, given the extensive promo tours each celeb, major or minor, endures. The sentiment spikes enjoyed by most of the AMA subjects, however, suggest Reddit is truly a strong and, more importantly, a positive platform to get your message to the consumers.

Just make sure you don’t try to push too hard — a quick search for “Rampart” might let you know why Woody Harrelson isn’t going back to Reddit anytime soon.

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Asher Feldman

Asher Feldman is an analyst at General Sentiment, a Long Island, N.Y.-based social media analytics firm. Find them on Twitter @gensent.
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A Banking View on Windows XP and the End of Support: See It, Block It

A Banking View on Windows XP and the End of Support: See It, Block It
By Christopher Budd


We are a couple of days away from a proverbial red letter day: the end of security support for Windows XP on April 8, 2014.

For the past few months, we’ve been talking about this impending event. We’ve talked about what people can expect in terms of the number of vulnerabilities they may see when Microsoft stops issuing security patches. And we’ve tried to make very clear that this is a situation that can affect everyone, not just those running Windows XP.

 

 
When we talk about the dangers that people on Windows XP pose to others, there’s probably no single industry that faces a greater set of risks by users being on Windows XP than banking and finance. More than any other industry, banking and finance face significant risks of fraud and loss due to its customers’ making the unwise decision to stay on Windows XP. As an industry facing extraordinary, unprecedented risks around Windows XP, banking and finance should consider equally extraordinary, unprecedented steps to protect themselves by alerting customers who are on Windows XP of the risks and encouraging them to upgrade. In some cases, especially as time goes on, the banking and finance sector should consider taking steps to block customers still on Windows XP from their services entirely.

The reason that banking and finance are at so much at risk by its users being on Windows XP is that unpatched vulnerabilities will be found and attacked on Windows XP. And as we’ve shown in our 2013 Threat Roundup, online banking malware is a huge problem. From 2012 to 2013, detections of online banking malware more than doubled from 500,000 worldwide in 2012 to more than 1 million in 2013. And the United States and Brazil alone accounted for 50%, or 500,000 detections, of online banking malware. Skyrocketing online banking malware combined with a coming slew of never-to-be-patched vulnerabilities means that online banking on Windows XP is going to become incredibly dangerous soon. And while that is a risk to the users of those Windows XP systems, in aggregate and in the end, it’s those users’ banks and financial institutions that face the greatest risks.

From a technological point of view, when users go to websites, it’s a relatively simple matter to detect the browser and operating system that’s accessing the site. Using that information to create an alert to make people aware of the risks of being on Windows XP and what they should do about it is an easy way to help spread the word. And a step like this will reinforce actions that Microsoft themselves are taking to alert users through alert messages. The broader the net is spread to pass the word about these risks the better.

But warnings may not be enough. People tune warnings out and ignore them. We shouldn’t fool ourselves into thinking that warnings alone will be sufficient. And as time goes on, this situation will become worse and worse. Banks and financial institutions should also start considering the drastic measure of actively blocking users on Windows XP from using their online services entirely.

This is clearly an extreme measure as it will cause lost business. But this step may be justified, especially if the risks of financial losses from Windows XP users exceed the risks of losses from losing those customers. It’s not desirable to turn customers away, but businesses do it all the time in service of their larger concerns. The coming situation with Windows XP and the risks those users pose to their banks and financial institutions is a good example of when these larger considerations pertain.

Of course, in addition to online alerts or blocks, further education campaigns make sense. Notifying customers of the risks and what they should do, through email and online campaigns, can further reinforce the message. Banks and financial institutions (and really anyone) should feel free to disseminate our flyer that outlines these risks.

Banking and finance aren’t the only sectors that are particularly at risk starting next week. But it is the sector that may face some of the greatest impact over time as its users continue to refuse to switch. We’re getting down to the wire and time is running out. Increasingly, those still on Windows XP represent those who most stubbornly refuse to take action. Increasingly, organizations who are themselves at risk by the non-actions of these recalcitrant users will have to themselves take actions that seek to spur those users into action. In short, we have to make it more painful for these users to do nothing than to take action. And so, a viable tactic in support of this goal around Windows XP is if you see it, block it.

Christopher Budd is a communications manager with Trend Micro. His focus is on communications around online security and privacy threats to help people understand in plain English the risks they face and what they can do about them. In addition, he focuses on managing crisis communications utilizing a framework and processes he helped put in place.