Thanks @nguyentridat for sharing the news.
Investor Sentiment had been argued by academics and implemented for financial reports over the last 12 years. Some sources may include:
- Barberis, Shleifer & Vishny 1998
- Bandopadhyaya & Jones 2005
- Hulbert 2008
- Investor Intelligence Sentiment Index
- American Association of Individual Investors (AAII) sentiment indicator
- Nova-Ursa ratio
- Short Interest / Total Market Float here and here
- Put/Call ratio
What I usually do with Investor Sentiment for research purpose is to factor it in a forecast model, for example
Because Sentiment serves as a factor, the data need to be fast, lean and ‘plugged in’. TechCrunch reports that the company is in talk with research houses to provide data which is sensible.
As I browsed through the site, I found the domain of content interesting. Investor Sentiment information in models I’ve seen are somewhat mechanistic, or dry. Put it scientifically, proxies of the factor tend to be directly derived from financial and business activities of companies and market movements. I feel unease: Sentiment falls to a very different dimension: sentimental, organic, intangible, and irrational. The screenshot above highlights a charitable activity of GE which earns the company 0.75 mark. This activity initially appears less market-related, but wait, it is. Corporate social responsibility partly makes good branding, branding leads to sales, sales drive stock performance. I don’t know how powerful this subtle information is on investor behavior; I think it’s nice the site tries to cater for these domains of information.
The observation above leads to another complexity: how to weight the information. Investor category (Moms&pops and analysts behind trading desks), culture, market microstructure (e.g. participants)… are input to weighting of each information piece. I’m sure the team has considered this.
In sum, the service is nice in how they try to factor in sentiment information, and user interface is great. What I really look into is how I am able to incorporate their results into my analysis. I’d prefer having the data for use.
Reference
Bandopadhyaya A, Jones A L, 2005, ‘Measuring Investor Sentiment in Equity Markets’, working paper, UMB, 2005
Barberis, N, Shleifer A, Vishny R, 1998, ‘A Model of Investor Sentiment’, Journal of Financial Economics, 49, 1998
Hulbert M, 2008, ‘Trying to Plumb a Bottom’, Barrons, viewed 23/9/2010, from <http://online.barrons.com/article/SB122652105098621685.html>
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