Poll: How Useful Are Social Media Channels in Your Investment Decision-Making Process?
Investment analysis includes sophisticated financial analysis, the construction of cash-flow models, strategic and competitive analysis, and various forms of assessing management. However, forming our opinions of a security is only half the battle; the other half is understanding the market’s perception of the very same security — and how that perception is manifested in the security’s price.
Social media can be a tool for gauging the perceptions of others, be it the market’s receptivity to a company’s product or the feelings investors have about a particular stock or bond.
Nevertheless, when we asked CFA Institute Financial NewsBrief readers how important social media is to their investment decision-making process, the overwhelming majority rejected the idea that social media adds value. Of the 704 respondents, roughly 86% indicated that social media tools, such as Twitter, are not useful and are even counterproductive. Only 14% believe that social media tools are useful.
How useful are social media channels, such as Twitter, in your investment decision-making process?
Are these latter respondents in the vanguard of a new trend in investing? Perhaps learning how to use these new tools to their highest and best use — without getting sucked into time-wasting activities — might sway the masses. We will continue to explore this issue in future polls.
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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.
Interesting! I would’ve thought the exact opposite, but I guess I’m biased bc I user twitter to gauge sentiment for smaller cap names
I think the analysis is interesting, but I’m really concerned that you’re taking broad swipes at social media without fully grasping the depth of the “social finance” vertical and what it provides investors.
Websites like StockTwits, HVST, and Estimize provide realtime commentary, as well as Q&A and research all for free.
We pride ourselves in “actionable” information.
We found in our data studies, that not only might it not be useful for evaluating investments, firms that invest heavily in social have some questions to answer about whether there is ROI. Forrester recently published a study saying firms were wasting funds on Facebook. Here is our data study on Twitter Social Data and the ROI.
http://xplane.us/the-cold-hard-data-on-corporate-social-media-investment/
If you feel there are additional social media data or twitter data studies that would assist your community we are running them at no cost for our blog.
FYI – Xplane.Us is a think tank focused on business and cultural intelligence from social data sources.
I’ve seen social media platforms like Twitter play an important role with short term trading but in regards to long term investments I’m not really surprised by the results with the primary focus leading more towards company fundamentals in line with the elusive search for value.