Ho John Lee’s Weblog

Barry Ritholtz points out the new community sentiment feature, part of the new front page for Yahoo Finance.

Stock message boards are a fascinating place to scan through from time to time, containing a mix of informed, uninformed, and sometimes deliberately misleading posts. On average, the post volume and prevailing sentiment is probably a good contrary indicator. Part of what makes stock message boards interesting is the sheer volume of misdirection and general noise. At the same time, there are a smaller number of board posters that contribute more than blind cheerleading or bashing their chosen stocks.

I spent some time a while back looking at trying to automate the process of scanning the Yahoo Finance boards for “informed” or otherwise actionable message flow, but concluded that the project wasn’t worth the effort unless I was working for Yahoo. Some of the process I was considering would have been to determining a reputation value for messages and contributors, partly based on historical outcomes and partly based on user-generated ratings. The last revision to the finance message boards incorporates a simple rating system, but what I was looking for was the ability to see the ratings from a trusted set of users, and the ability to rate the posters, and perhaps their likely context (long term holder, swing trader, or intraday trader). The other piece would have been to implement some backtesting on the various sentiment indicators to see whether it had any trading value at all.

The sentiment indicator is being generated by Collective Intellect, which says:

Using proprietary algorithms, Collective Intellect’s Media IntelligenceTM service filters and ranks bloggers and posts, so you only see the most credible sources of information — and only when it’s relevant to your trading strategy.

I think it’s much easier to deal with analysis of the financial bloggers than the stock message boards and chat rooms. It will be interesting to keep an eye on how this new feature works out.

This entry was posted on Sunday, September 9th, 2007 at 9:56 pm and is filed under Finance/Investing, Front Page. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.