A Little Birdie Told Me: The Amazing Foretelling Powers of 140 Characters

The financial markets are becoming increasingly mechanized. As we take specialists out of the equation we have created a new and growing pool of analysts, which even includes you (yes, you!). In the past couple of years, as prediction markets have become a hot commodity, studies have proven that Twitter results can be as just a valuable a method to determine the future as standard stock market analytics.

What do we love most about this?

The information for these prediction markets, based on Twitter results, is coming from the tweeting masses. That’s right: Your simple 140-character tweet impacts how people invest their money.

Sounds a little scary, right? Why would you base your investment decisions on information gathered from the general population tweeting around the world?

The answer: Because it works.

Twitter strategies have outperformed other standard strategies by “between 1.4% and nearly 11% and also did better than the Dow Jones Industrial Average during a four-month simulation” (1).

Not to mention the power of Twitter in forecasting metrics like sales of products or sales at the box office. And in many cases, “Twitter might be more than just a mirror of mass sentiment—the service might also influence it” (2).

If you could look into the future through Twitter, like a crystal ball, what prediction would you want to see?
 
1. http://www.wired.com/wiredscience/2010/10/twitter-crystal-ball/
2. http://www.sciencedaily.com/releases/2012/03/120326113321.htm