

Twitter Can Predict the Stock Market - Garbage
http://www.wired.com/wiredscience/2010/10/twitter-crystal-ball/

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andrewcamel
I had really mixed feelings after reading this article because on one hand, I
was beaten to the punch (I was already working on using Twitter trends to
predict how stocks would change), but on the other hand, I am very happy to
know that the idea was actually proven to work, after I toiled for so many
hours determining how it might actually work.

The best solution that I found was to factor the rise in rate in positive or
negative twitter posts in a given day into an algorithm already based on
something called the "magic formula". The "magic formula" is formed on the
thinking that stocks can be chosen based on their ranking in a list; this
ranking is determined by a high return on capital, low p/e ratio, and a high
volume.

My plan was to factor in twitter trends to the list so that stocks would be
ranked better, based on public opinion of the stock. I actually was able to
figure out how to do this relatively well, as I improved the accuracy of the
"magic formula", but failed to make it significantly better. The key is to
study the trends and figure out when stocks have a lot of negative talk about
them, and then buy them right as the rate of negative tweets about the company
stops.

Would anyone be interested in developing this idea further for open source use
or even possibly for some profit?

