Tag Archives: finance

Seth McGuire on Social Media and the Stock Market

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Gnip’s Seth McGuire was on CNBC’s Squawk Box speaking to Andrew Ross Sorkin about social media and how investors can use data from social networks as part of their strategy. Gnip has been providing social data to the financial industry for more than a year, with clients including hedge funds, banks and signal/data providers.  Specifically, Seth spoke to how hedge funds and other traders are using social data as a variable in their algorithms, as well as a research product for deeper analysis of an equity.

Andrew and Seth also talked about how news frequently breaks on Twitter (the famous examples here is the death of Osama Bin Laden). This type of breaking news on StockTwits and Twitter provides a valuable signal that is frequently ahead of mainstream news. (As we’ve blogged before, natural disasters often are reported on Twitter before anywhere else.) Seth also talked about yesterday’s blog post from our data scientist, Scott Hendrickson, on JP Morgan’s $2 billion trading loss and how the news traveled through different social media publishers.

What Gnip has also seen is that while false stories might be shared on Twitter, Twitter is also quick to surpress the stories via crowdsourced response and questions as to the integrity of those false stories.

Squawk Box guest host Doug Dachille posed an interesting question on whether any of the financial regulators have reached out to use Gnip. While Gnip is serving government agencies in areas like disaster relief, right now it’s the actual compliance and data management departments at banks and funds who are more worried about social media. Most firms lock down the ability to post content on social networks, given SEC & FINRA restrictions, but when compliance officers walk the floor they see traders peeking at their iPhones or iPads to see breaking news and analysis on Twitter and StockTwits. From a compliance perspective, that’s dangerous…but they know the data is valuable so they’re seeking news ways (like Gnip) to bring that data in-house for controlled analysis.

Interested in learning more on social data and the stock market? Email info at gnip.com.

Launching Gnip MarketStream & Partnership with StockTwits

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While the market has been on its roller coaster ride across the past month, Gnip has kept its collective head down and stayed busy on behalf of our Investment Management clients (hedge funds, HFTs, asset managers, etc.). That hard work has paid off and we have two exciting announcements to make today.

  • Launch of Gnip MarketStream: Our hedge fund clients have been quite vocal in their desire for a package incorporating the most relevant social data streams into a single low-latency, high-volume solution. We’re proud to answer their needs with the launch of Gnip MarketStream, a realtime data solution that packages the incredibly rich and broad “voice of the market” Twitter stream with the uniquely deep and targeted “voice of the trader” StockTwits stream.
  • Premium Partnership with StockTwits: An integral component of the Gnip MarketStream is StockTwits social media data. We’re thrilled to announce this partnership with StockTwits, the leading realtime financial platform for the investment community and creator of the $(TICKER) tag. The StockTwits stream is a curated, defined-demographic, realtime social data stream focused on investment decisions and analysis. Gnip now provides streaming access to the full StockTwits firehose of social data, and offers access to historical content as far back as 2009.

While the use of social media data by the investment community has included use of this data in news analysis and equity research, the primary adoption of this data across the last six months has been as a trading indicator. By combining the strengths of both the Twitter stream and the StockTwits stream, Gnip MarketStream provides investment professionals unparalleled access to relevant social data at time when social media has become an increasingly vital channel for news and market sentiment.

For more information about Gnip MarketStream or StockTwits data, contact trading@gnip.com.

Why Traders Use Social Media: Speed & Amplification

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Gnip’s asset and investment management clients are consistently impressed by two aspects of our social data that differentiate this data from their other sources: Speed & Amplification.

Speed

Speed relates to the ability of social media content to be ‘instant’; an ability fueled by millions of global users who can break news and sentiment more immediately than traditional media sources always can.

A prime example is news of the death of Osama Bin Laden. Keith Urbahn, the former chief of staff for Don Rumsefeld, is widely credited with the breaking that story… through Twitter!

After Keith’s tweet, multiple retweets quickly followed. Within 19 tweets on this subject, a company called DataMinr had identified this as an important and breaking story. DataMinr, a “global sensor network for emerging events and consumer signals,” then issued a signal to their clients, alerting them to this important piece of information.

How does this play into the ‘speed’ characteristic? Because it would be over 20 minutes before that story appeared on traditional news sites. Access to a data stream that can beat traditional media sources by over 20 minutes requires no explanation as to its value for traders and investors.

Amplification

Amplification speaks to the ability of social media as a ‘crowd-sourced megaphone.’ The propensity of users to like, share, and retweet content from other users gives those consuming social media data an extremely easy mechanism to measure what content is most important to the world – and compare that content against other content in real time.

A prime example is the passing of Steve Jobs. We wrote about Steve Jobs’ passing a few weeks ago – that post is here – but there’s an important item to revisit:

The impact he had on us made his death that much more profound and the reaction on Twitter was immediate and immense. Word spread rapidly, peaking at 50,000 Tweets per minute within 30 minutes. At that point, Tweets about Jobs accounted for almost 25% of all Tweets being sent globally.

Access to Gnip’s social media data stream allowed our clients to measure, in the moment, the amplification of this story to measure the importance the world placed on this piece of news. While I doubt any of us needed to see those numbers to know Steve’s passing was an important piece of news, that’s a clear example of how ‘amplification’ works.

Our clients use amplification as a measure to weigh the importance of breaking news, upcoming events, market and product announcements, etc. against other stories. By capturing a realtime snapshot of what the market considers important – and what it doesn’t – they’re able to add an important factor to their existing algorithms.

None of this is to suggest that either social media data speed or amplification should be a sole factor in investing. But when the Gnip social media data stream provides clients with an additional factor to help understand or predict market fluctuations, the value is obvious.

We're off to Dreamforce!

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There’s always a lot going on here at Gnip, but this week is especially packed with the team looking to make a big splash at Salesforce.com’s annual Dreamforce event. Salesforce is obviously a huge player in the software space and the theme of this year’s Dreamforce is “Welcome to the Social Enterprise” which fits really nicely with what we do.

At the conference, we’ll be speaking at two sessions and sponsoring the Hack-a-thon. In the first presentation, Drinking from the Firehose: How Social Data is Changing Business Practices, Jud (@jvaleski) and Chris (@chrismoodycom) will discuss the ways that social data is being used to drive innovation across a variety of industries from Financial Services and Emergency Response to Local Business and Consumer Electronics. They’ll also give a glimpse into the technical challenges involved in handling the ever-increasing volume of data that’s flowing out of Twitter every day. If you’re at Dreamforce, this session is on Tuesday (8/30) from 11am to noon in the DevZone Theater on the 2nd floor of Moscone West.

In the second presentation, Your Guide to Understanding the Twitter API, Rob (@robjohnson) will talk through the best ways to get access to the Twitter data that you’re looking for, examining the pros and cons of the various methods. You can check out Rob’s session on Tuesday (8/30) from 3:00 to 3:30 in the Lightning Forum in the DevZone on the 2nd floor of Moscone West.

And finally, we’re sponsoring the Hack-a-thon where teams of developers will create cloud apps for the social enterprise using Twitter feeds from Gnip and at least one of the Salesforce platforms (Force.com, Heroku, Database.com). The winning team stands to take home at least $10,000 in prize money. We’re really excited to see the creative solutions that the teams develop! All submissions are due no later than 6am on Thursday (9/1), so sign up now and get going!

Want to meet up in person at Dreamforce? Give any of us a shout @jvaleski, @chrismoodycom, @robjohnson, @funkefred.

Can Social Media Data Offset Market Volatility?

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It’s been a volatile time for the markets the last few weeks. Today especially – the Dow closed down 635 points; S&P, -80; NASDAQ, -175. While there’s no shortage of opinions on how/why the market will/will not recover, one thing is for certain – having the right data to make decisions is more important than ever.

Part of the reason for this is that the markets are clamoring for trends – definitive information on stock trends and market sentiment. Which is why it’s exciting to see how our finance clients are using the Gnip realtime social media data feeds. In a time of increased volatility, our hedge fund (and other buy-side) clients are leveraging social media data as a new source of analysis and trend identification. With an ever-growing number of users, and Tweets, per day, Twitter is exploding, and market-leading funds are looking at the data we provide as a way to more accurately tap into the voice of the market. They’re looking at overall trend data from millions of Tweets to predict the sentiment of consumers as well as researching specific securities based on what’s being said about them online.

While the early-adopters of this data have been funds, this type of analysis is available to individuals as well. Check out some start-ups doing incredible things at the intersection of finance and social media:

  • Centigage provides analytics and intelligence designed to enable financial market participants to use social media in their investment decision-making process
  • SNTMNT offers an online tool that gives daily insights into online consumer sentiment surrounding 25 AEX funds and the index itself

For the first time in history, access to (literally) millions of voices is at our fingertips. As the market continues its volatility, those voices gain resonance as a source of pertinent information.

Financial Markets in the Age of Social Media

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When you think about it, the stock market is a pretty inspiring thing.

Over the past several centuries, humans have actually created an infrastructure that lets people put their money where their mouth is; an infrastructure that provides a mechanism for daily valuation of companies, currencies and commodities. It’s just unbelievable how far we’ve come and reflecting on the innovation that’s led us here brings to light a common but powerful denominator: Information.

  • When traders began gathering under a buttonwood tree at the foot of Wall Street in the late 1800′s, it was because proximity allowed them to gossip about companies.
  • When Charles Dow began averaging “peaks and flows” of multiple stocks in 1883, his ‘index’ became a new type of data with which to make decisions.
  • In 1975, when the sheer volume of paper necessary for trades became unmanageable, the SEC changed rules to permit electronic trading, allowing for an entirely new infrastructure.
  • And in the 1980′s, when Michael Bloomberg and his partners began building machines (the now ubiquitous Bloomberg Terminals), they tapped into an ever-growing need for more data.

Those are just some examples of the history that is exciting for us @Gnip, because of the powerful signal the market is sending us about social media. Here are some of the more recent signals we’ve seen:

  • The Bank of England announcing they were using Google search results as a means of informing their “nowcasts” detailing the state of the economy.
  • Derwent Capital Markets launching the first social-media based hedge fund this year.
  • The dedication of an entire panel to Social Media Hedge Fund Strategies at the Battle of the Quants conference in London last week.
  • Weekly news articles that describe how traders are using social data as a trading indicator (here’s one as an example).
  • Incorporation of social data into the algorithms of established hedge funds.

In other words, the market is tapping into a new and unique source of information as a means of making trading decisions. And the reason social media data is so exciting is because it offers an unparalleled view into the emotions, opinions and choices of millions of users. A stream of data this size, with this depth and range, has never really existed before in a format this immediate and accessible. And that access is changing how our clients analyze the world and make trades.

We’ve been privileged to see these use cases as we continue to serve a growing number of financial clients. Most exciting to us, as we respond to the market’s outreach for our services, is understanding our pivotal place in this innovation. As the premier source of legal, reliable and realtime data feeds from more than 30 sources of social media- including our exclusive agreement with Twitter- we’re at the center of how firms are integrating this data as an input. And that’s incredible stuff.

Are you in the financial market looking for a social media data provider? Contact us today to learn more! You can reach us at 888.777.7405 or by email.

What Does Compound Interest Have to do with Evolving APIs?

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Once Albert Einstein was asked what he found to be important discoveries. His answer did not mention physics, relativity theory, or fun stuff like Higgs bosons – but instead he said: “Compound interest is the greatest mathematical discovery of all time.”

I trust that most of you understand compound interest when it comes to investing or debt, but humor me and let’s walk through an example: Say you owe your credit card company $1000, and your interest rate is 16%. To make it simple, we assume the credit card company only requires you to pay 1% as your minimal payment every year, so the effective interest rate is 15%. After 30 years of compound interest you owe almost $60 000!

Compound Interest Graph

If there would be no compounding, you’d just owe a little bit over 5 grand!

What I find truly bizarre though is that when us software engineers throw around words like “technological debt” the eyes of our project managers or CEOs frequently just glaze over. Instead of doing the right thing – I’ll get back to that later – we are asked to come up with the quick hack that will make it work tomorrow and deal with the fallout later. Really? Sounds like we are using one credit card to pay off the other.

And we are even staying within terminology using “debt”! We could have said something like “Well, it would take us roughly 1 week longer to integrate our current J2EE backend with this 3rd party SOAP API instead of expanding our current custom XML parser, but then we would be done for good with maintaining that (POS) part of the app and can focus on our core IP.” But no, we keep it simple and refer to the custom XML parser as “technological debt”, but to no avail.

Now, the next time you have this conversation with your boss, show him the plot above and label the y-axis with “lines of code we have to maintain”, and the x-axis with “development iterations”, and perhaps a bell will go off.

Coming back to doing the right thing. Unfortunately determining what is the right thing is sometimes hard, but here are two strategies that in my experience decrease technological debt almost immediately:

  1. Refactor early and often
  2. Outsource as much as possible of what you don’t consider your core competency.

For instance, if you have to consume millions of tweets every day, but your core competency does not contain:

  • developing high performance code that is distributed in the cloud
  • writing parsers processing real time social activity data
  • maintaining OAuth client code and access tokens
  • keeping up with squishy rate limits and evolving social activity APIs

then it might be time for you to talk to us at Gnip!