Social Media

Twitter is an excellent resource for investors wanting to understand information and improve investment returns.

Have you ever wondered why some tweets are valued more than others? (Think of the people you’ve followed, or “unfollowed,” in recent months and why.) Well, the wait is over. A new study, “Who Gives a Tweet? Evaluating Microblog Content Value,” provides some answers.

Large sample studies of buy-side investment recommendations have been virtually impossible to execute due to a lack of data. But a new research paper relies on a novel data set compiled by the private social networking website SumZero to show that buy-side stock picks influence asset prices by bringing new information to the marketplace. The authors also find evidence of “wealth transfers” flowing from the broader institutional marketplace to the investment firms represented on SumZero.