Bet Bollen’s Got a Beard

by Rubberneck @BubbleJobs

Just Passing.

We talk a lot about the influence and spread of social media, but get this for an idea.

Professor Johan Bollen of Indiana University, (pronounced Indi-aarna by my posh friend Eileen), recently produced an academic paper…these are the ones that can only be written by the really clever people who contemplate their navels regularly and sometimes, yes, sometimes come up with that Eureka moment.

Well, old Prof. Bollen has done just that! Paul Hawtin of Derwent Capital Markets thinks so too, and he is getting him on board to develop his brainwave.

This is what it is…‘Twitter predicts the Market’. What?! say you; how can the 190 million or so Twitter account holders, (am I already out of date on this one?) predict the market ? Well, that’s it…they don’t, but the mood of their tweets does apparently. Prof. Bollen uses some weird algorithm to process these tweets. So strategy and holdings of stocks could be determined by the ‘mood’ of the market out there, aggregated using millions and millions of daily tweets.

Hawtin’s team (and this is only a small ‘boutique’ hedge fund, with about 8 of them altogether apparently), call this the ‘4^th Dimension’…I am not totally sure what the other 3 are, but please feel free to enlighten me…producing a lag of 2 to 3 days between a change in sentiment on Twitter and a change in the direction of the Dow Jones index.

Hawtin calls his fund the Absolute Return Fund and confidently predicts returns of 15 to 20%. Now that is good. He has already received pledges in excess of £20m.

Is this just a gimmick I ask?

Hawtin, (not Hawking) openly says, and I paraphrase, “It doesn’t take a rocket scientist to figure out how valuable this mood change analysis is to us.”

I for one am going to invest my weekly Lottery money here instead, but first I am going to check out this Professor Bollen on LinkedIn…see if I like his face. If he’s got a beard…no way!

Hey! Just thought…anyone out there with a really simple but so,so,so clever idea , then let me know. I’m in…possibly, (beards not allowed though!).

Moving on.

Rubberneck.

Tags: Dow Jones, social media, Stock Market, Twitter