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social media watch

The Word on the Tweet: From Wall Street to Social Stock Tips

Posted by Sheila Shayon on April 11, 2011 01:30 PM

Twitter is emerging as a growing player in financial circles as tweets can be analyzed for “sentiment signals" and used "to predict short-term changes in broad stock market indices.” 

That's from a New York magazine article titled "Investors Slobber Over Cayman Island Hedge Fund That Predicts Stock Market Based on Twitter."

It's not entirely a new idea. StockTwits already touts its Twitter-based service as "Real Investors. Real Ideas. Real Time."

Howard Lindzon, founder and CEO, is always looking for the next frontier. The latest: an integration with Seesmic, as he highlights in a video with its founder and CEO, Loic LeMeur.

In its simplest definition, StockTwits lets users "eavesdrop" on publicly available social media chatter by traders and investors, or interject themselves into the mix as market wizards in search of a following.

Log onto the site with your Twitter information (or download the StockTwits desktop app), and join a community with an abundance of information immediately available whether your interest is  short term trader, swing trader or investor, or stocks, Forex, options or futures. 

Discovery is at the heart of the site, identifying like-minded traders and investors and mining their tweets real-time as financial intelligence.

The London-based Derwent Capital Markets, the fund featured in the New York magazine piece, only features a single web-page and hasn't formally launched yet:

The reason, as IR Web Report notes:

The Derwent Absolute Return Fund Ltd, in the process of being set up in the Cayman Islands, was supposed to launch April 1 with $40 million in assets, but the fund now has expressions of interest from investors around the world totaling almost $100 million.

This has forced two-year-old Derwent Capital Markets, a boutique investment firm run by brothers Paul and Simon Hawtin, to revise the corporate structure of the fund. They also are awaiting approval from the UK Financial Services Authority to a change in the nature of their investment business.

Turns out their plan has been delayed by an overwhelming influx of potential investors from around the world – moving the needle from $40 million in starting assets to $100 million – requiring a restructuring, already.

The BBC last week featured another British startup, TweetTrader.net, which is currently in beta as it rolls out its real-time social media sentiment analysis for individual stocks.

Clearly, as Twitter looks to boost its own capitalization through a possible IPO in the next 12-18 months, its platform has created an opportunity for those looking to boost their financial and investment savvy by tuning in to Wall Street chatter — even if that chatter is highly truncated, filtered and should come with a giant warning: "Caveat emptor."

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