Social Netw…. Trading!!!

It could sound super weird but, according to this article on The Economist "The mood of the market” (Jun 29^th 2012 http://www.economist.com/blogs/schumpeter/2012/06/tracking-social-media), many firms have started relying on and social-networking platforms to make their investment decisions!

Always more firms, in fact, are applying artificial intelligence technology to get the gist, and use that as a trading signal. Moreover, one study in 2010 by researchers at Indiana University analyzed millions of tweets to predict the movement of the stock market three days later with an 87% accuracy. This has brought a new fashion for Wall Street quants to plug so-called "sentiment analysis" of social media into their massive models.

Even if several studies show a potential for the success of this so called "model crowding” I think that this won’t bring anywhere. So far, for example while it is very well-known that two funds (Derwent Capital in London  and an in-house fund at MarketPsych) which started using “model crowding” have been shuttered down, there are not significant data about firms which have implemented “model crowding” successfully.