Fascinating concept I came across on Yahoo Finance — Community Sentiment. The site wants to look at increases in message board content to identify when sentiment has shifted.
This has the potential to be a very interesting tool — albeit with a lot of caveats.
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According to Yahoo:
"Community Sentiment shows the stock message boards with significant
increases in bearish and bullish message board activity in the last 24
hours when compared to the board’s 30-day average."
How is this accomplished? Is Yahoo using AJAX to pull keywords off of posts? Is it merely a function of relying on the reported bullish/bearishness of the poster to develop ratings?
This has a lot of potential to be an interesting sentiment tool for individual stocks. But it also is fraught with the potential for abuse.
How easily can this be gamed by touts and scammers? While Yahoo! was asleep at the wheel, the Yahoo Message Boards were essentially rendered unusable by spammers. How long will it be before someone figures out how to "play" this ?
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UPDATE: September 9, 2007 9:55am
Marketwatch (appears to be) working with Yahoo!, and is offering this version:
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Sources:
MarketPerception
http://www.marketwatch.com/MarketPerception/
Yahoo Finance
http://finance.yahoo.com/newfp
few months back i wanted to buy a car….yahoo autos users say that honda and toyota sucks but nissan is great.
how difficult is it to hire a dozen people in asia to create hundreds of ids and game these boards??
You might as well use technical indicators. Wait, you already do use technical indicators?
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BR: No, I prefer to listen to what compromised Fundamental analysts have to say . . .
My memory may be a little fuzzy as it’s been 7 or 8 yeas but my recollection is that you sell stocks when all the touts come out on the message boards, no?
I also distinctly remember that the best internet ’10 baggers’ had message boards where the bears far outnumbered the bulls.
Boy, I get all misty eyed just thinking about the good ole days…
John
Interesting indeed, but wait – boardcentral.com has been doing it for years showing Most Popular across 14 largest message boards, its own search engine and even including Spam/Hype activity.
There might be more behind this new tool. Check:
The Journal of Finance
“Is All That Talk Just Noise? The Information Content of Internet Stock Message Boards”
by Werner Antweiler and Murray Z. Frank
(http://www.afajof.org/journal/abstract.asp?ref=0022-1082&vid=59&iid=3&aid=662&s=-9999)
Yahoo message board has an option for your comment where you select “Strong Buy; Buy; Sell; Strong Sell…etc”.
I bet they just aggregate those.
Could be useful as a negative indicator. (Have you ever read Yahoo message boards? “Yahoo” is the correct term)
InquiringMind
I have always viewed the “sentiment” of a message board as a reliable contrarian indicator. When the message boar dis especially giddy, problems are on the horizon.
I read somewhere that there is a site which tracks the number of visits to kitco.com as a measure of sentiment regarding the precious metals sector. I forgot what the site is though. If anybody knows, I’d appreciate it if they would post it here.
“How is this accomplished? Is Yahoo using AJAX to pull keywords off of posts? Is it merely a function of relying on the reported bullish/bearishness of the poster to develop ratings?”
Barry,
The answer is in small print on the image – “Data Provided by Collective Intellect”
Read below how they do it (Collective Intellect, not brainless Yahoo)
http://www.collectiveintellect.com/finance.php
“Using proprietary algorithms, Collective Intellect’s Media IntelligenceTM service filters and ranks bloggers and posts, so you only see the most credible sources of information — and only when it’s relevant to your trading strategy.”
P.S. Barry, do you know what percent of ARMs are Libor-based ARMs? Libor is very high (almost 6%); hence those borrows could be hit with 10-12% resets.
I feel that it’s just too easy to “game” the message boards with posts that suit the ulterior motives of whomever takes the time to hire a bunch of kids to so.
It may be possible to game the Yahoo boards but much harder to game the Internet. I’ve been doing similar data-mining with Dejanews for several years.
Check out the correlation between stock price and keyword count –
http://www.realmeme.com/Main/miner/stock.jsp?startup=http://www.realmeme.com:80/Main/miner/investment/AMZNDejanews.png
The highest correlation was Siebel, probably because of the uniqueness of the company name –
http://www.realmeme.com/Main/miner/investment/SEBLDejanews.png
Google’s had a similar tool online –
http://www.google.com/trends
This means companies like Novastar (now BK) will either need to:
a) Pay their hired stock pumpers more money because, they will have to create so many more aliases to influence polls
b) Hire more stock pumpers to influence polls.
BTW how would a budget item for pumping your stock show up on a corporate balance sheet? PR? Good will? LOL
You can track visits to Kitco or other sites at http://www.alexa.com
Here is info on Kitco offered by Alexa
http://www.alexa.com/data/details/traffic_details?url=http%3A%2F%2Fkitco.com
There is another site http://www.compete.com that does site analysis as well.
This is reply to Bob’s post below
“I read somewhere that there is a site which tracks the number of visits to kitco.com as a measure of sentiment regarding the precious metals sector. I forgot what the site is though. If anybody knows, I’d appreciate it if they would post it here.”
We need the data from finance.yahoo.com and finance.google.com which stock charts did people look at. Should be more interesting then figuring out how to check message boards and avoid spammers.
The ticker is in the url used. If its possible to get the complete url. Perhaps from refering sites..