Twitter has become a social networking phenomenon, with more than 200 million users around the world, and more than 10 million daily users. A European hedge fund is planning to harness the power of Twitter by making investment decisions based on real-time messages, known as tweets. The founder of the fund along with a University professor, claim they can predict market directions based on Twitter trends and the various moods of tweets, which are 140 characters or less.
Using proprietary technology, the fund will monitor tweets and sort them into several categories, such as calm, alert or happy. According to analysts, the idea rather makes sense since markets generally reflect the mood of the investors, and with such large number of daily users on Twitter, the mood inspired from the tweets (which is a considerable representative sample) will provide a good assumption about the actual general mood of the investors and the markets around the world.
The idea is still being debated and the question is whether the fund owners will succeed in convincing investors about their project, and therefore be able to raise sufficient funds to meet the launching threshold of this avant-guardist new hedge fund.
One thing is sure: if only by using Twitter to predict the market movements this hedge fund can perform well, and consequently generate profits for on-board investors, many others will follow this business model and will start using the same tool for their new investments. It will be a new era for Twitter as well which might see its popularity growing further and its company valuation flying high.
Using proprietary technology, the fund will monitor tweets and sort them into several categories, such as calm, alert or happy. According to analysts, the idea rather makes sense since markets generally reflect the mood of the investors, and with such large number of daily users on Twitter, the mood inspired from the tweets (which is a considerable representative sample) will provide a good assumption about the actual general mood of the investors and the markets around the world.
The idea is still being debated and the question is whether the fund owners will succeed in convincing investors about their project, and therefore be able to raise sufficient funds to meet the launching threshold of this avant-guardist new hedge fund.
One thing is sure: if only by using Twitter to predict the market movements this hedge fund can perform well, and consequently generate profits for on-board investors, many others will follow this business model and will start using the same tool for their new investments. It will be a new era for Twitter as well which might see its popularity growing further and its company valuation flying high.
