Saturday, July 20, 2013

Check the Buzz on Apple: Stocks in Social Media

A new site tracks what stocks social media are talking about. Is the sentiment good or bad?

Ever wonder what people are saying about your stocks? Tracking social-media sentiment about companies has become a regular part of portfolio management for many traders and investors in the last couple of years. If you’re one of them, or just curious, it’s definitely worth looking at a new Website from Market Prophit.

Marketprophit.com, which is free while in beta testing, displays interpretations of conversations taking place on a variety of social media, delivering bullish and bearish signals to members. It’s an intriguing idea, particularly because the signals are generated in real time, using quantitative analytics.

Stocks that are the focus of social-media attention, primarily from Twitter for now, show up on the Top Ten and Bottom Ten lists, where they are ranked by a sentiment calculation that ranges from +1 to -1. The more positive the reading, the more bullish the sentiment.

These lists automatically update about once a minute, or you can refresh your browser to get an up-to-the-second reading.

Clicking on a ticker symbol in the list, or entering a ticker symbol in the search box at the top of the screen, generates an entire page about that particular stock showing the sentiment reading throughout the trading day as well as traditional price and volume graphs. The company page also displays the most recent posts on Twitter about that ticker symbol as well as its fundamentals. The number of tweets posted per minute is interesting, especially for much-discussed companies such as Apple (ticker: AAPL) or Google (GOOG). There’s a “word cloud” displayed for each company, which is a visual display of the nouns and verbs most often used in tweets and other posts on social media.

HEAT MAPS SHOW, by sector or by exchange, what’s hot and what’s not at any given moment, using shades of green and red. There are quite a few sites and online brokerages that use heat maps to indicate price movement and trading volume, but this one shows the stocks, by sector, that are being talked about. A recent sentiment heat map for technology stocks, for example, showed bright green for Microsoft (MSFT), meaning the talk was positive, and bright red for BlackBerry (BBRY), suggesting the opposite. The “Buzz” heat map gives an indication of the most talked-about stocks; those with the most “Buzz” are displayed in larger boxes.

You can personalize a dashboard with the stocks you’re most interested in, either by typing in the symbols, or selecting from one of the Top/Bottom Ten lists by clicking on the appropriate icon. You can also set up alerts for specific stocks, which will send you an e-mail when triggered. For instance, you might want to be notified if a stock you just bought has a sudden downturn in sentiment, which would let you know it’s time to consider setting a stop-loss order. An upturn could provide an opportunity to write a covered call against one of your current long positions.

It’s free, for now, and provides food for thought as well as some actionable signals. I’d like to see a way to generate a graph that plots the Market Prophit sentiment signals against stock prices as well as the ability to add a sector to the dashboard.

ETF DATABASE OFFERS traders and analysts numerous ways to slice and dice the universe of exchange-traded funds. I like its list of the 100 highest year-to-date ETF returns as an idea generator. Another great tool for those considering exiting high-cost mutual funds is the mutual-fund-to-ETF-converter, which suggests ETF alternatives.

A recently launched tool for the budget-minded is ETFdb’s (etfdb.com) list of the cheapest ETFs, which displays the 100 funds with the lowest expense ratios. Two Schwab-sponsored ETFs, the Schwab U.S. Broad Market ETF (SCHB) and the Schwab U.S. Large-Cap ETF (SCHX) top this list with expense ratios of just 0.04%. For contrast, the site also lists the 100 ETFs with the highest expense ratios.

On that list, the “winner” is the Teucrium Sugar fund (CANE), with a 2.32% expense ratio—which is a higher expense ratio than most actively managed mutual funds. 

Published in Barron’s, July 15, 2013. 

Posted by twcarey on 07/20 at 11:13 AM
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