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New Hedge Fund To Use Twitter To Predict Market

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When it comes to making smart investing decisions, most people turn to advice from financial experts or keep up with the Wall Street Journal or Financial Times.

But how would you change your investment strategy if I shared with you the following information:

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Well, if you subscribe to the theory that Twitter actually predicts market behavior, you might not be so quick to write off these nuggets of wisdom. You see, embedded in the very fabric of every single tweet is a socionomic indicator that informs us of how people are feeling, what their mood is, and what’s likely to unfold as a result.

At least that’s the thinking of Johan Bollen and Huina Mao, professors of informatics and computing at Indiana University-Bloomberg. Their paper, “Twitter Mood Predicts Stock Market,” made headlines a few months back, and now it appears that they’re finally putting some money where their collective mouths are.

The Indiana Daily Student reports that a London-based hedge fund, Derwent Capital Markets, is creating a $40 million fund that will operate based on the Twitter study’s findings.

The two nutty professors will join the fund as “consultants,” where they’ll work the magic of their algorithm to what could be stunning results.

You see, the original paper found…and I hope you’re sitting down…that the algorithm predicted market changes with 87.6% accuracy.

The lesson? It’s time to stop looking at technicals, fundamentals, and really any kind of “educated” formula for predicting the market: instead, just stick with what apparently works, tweets from Charlie Sheen.

The latest?

“The Warlocks Carry-n”

So…uh…short United Airlines! I guess?
POSITION:  No positions in stocks mentioned.