Hielko Posted March 26, 2017 Share Posted March 26, 2017 Interesting paper, certainly applies to this board as well: http://www.cs.ucsb.edu/~ravenben/publications/pdf/echo-icwsm17.pdf Abstract: We examine the quality of information and communication in online investment discussion boards. We show that positivity bias and skewed risk/reward assessments, exacerbated by the insular nature of the community and its social structure, contribute to underperforming investment advice and unnecessary trading. Discussion post sentiment has negligible correlation with future stock market returns, but does have a positive correlation with trading volumes and volatility. Our trading simulations show that across different timeframes, this misinformation leads 50-70% of users to underperform the market average. We then examine social structure in communities, and show that the majority of market sentiment is produced by a small number of community leaders, and that many members actively resist negative sentiment, thus minimizing viewpoint diversity. To improve generated information content in online investment communities, we suggest designing to increase diversity of opinion, minimize friction around incorporating new information, and provide performance feedback for self-correction. Link to comment Share on other sites More sharing options...
rolling Posted March 26, 2017 Share Posted March 26, 2017 Thank you. Never had thought about it :-[ It should help avoiding some risks when thinking about investing in board ideas (either in this board others) Link to comment Share on other sites More sharing options...
merkhet Posted March 26, 2017 Share Posted March 26, 2017 Interesting paper, certainly applies to this board as well: http://www.cs.ucsb.edu/~ravenben/publications/pdf/echo-icwsm17.pdf Abstract: We examine the quality of information and communication in online investment discussion boards. We show that positivity bias and skewed risk/reward assessments, exacerbated by the insular nature of the community and its social structure, contribute to underperforming investment advice and unnecessary trading. Discussion post sentiment has negligible correlation with future stock market returns, but does have a positive correlation with trading volumes and volatility. Our trading simulations show that across different timeframes, this misinformation leads 50-70% of users to underperform the market average. We then examine social structure in communities, and show that the majority of market sentiment is produced by a small number of community leaders, and that many members actively resist negative sentiment, thus minimizing viewpoint diversity. To improve generated information content in online investment communities, we suggest designing to increase diversity of opinion, minimize friction around incorporating new information, and provide performance feedback for self-correction. Basically describes the $VRX thread. Link to comment Share on other sites More sharing options...
StubbleJumper Posted March 26, 2017 Share Posted March 26, 2017 Haven't we always known that Yahoo Boards were crap? At least there's decent thought by most posters on COBF, and there are precious few cheerleaders blindly pumping names. Link to comment Share on other sites More sharing options...
DooDiligence Posted March 27, 2017 Share Posted March 27, 2017 Haven't we always known that Yahoo Boards were crap? At least there's decent thought by most posters on COBF, and there are precious few cheerleaders blindly pumping names. ++ Link to comment Share on other sites More sharing options...
Cigarbutt Posted March 27, 2017 Share Posted March 27, 2017 I'm fairly new here but I submit that, overall, this forum is excellent. There a many outliers that make it uncomfortable but that's the way to go, especially if done in a respectful manner. But there is always a danger of self-reinforcing group think. Need humility and a strong inner score card at the same time. Not easy. I like:"To improve generated information content in online investment communities, we suggest designing to increase diversity of opinion, minimize friction around incorporating new information, and provide performance feedback for self-correction." Please never hesitate to provide help for self-correction. Who knows, maybe useful concept outside of investment circles? Link to comment Share on other sites More sharing options...
LC Posted March 27, 2017 Share Posted March 27, 2017 FYI: Calling the COBF forum excellent and somehow better than "lesser" forums i.e. yahoo, is the exact type of insular/echo chamber structure that the article is warning us about. Food for thought Link to comment Share on other sites More sharing options...
Cigarbutt Posted March 27, 2017 Share Posted March 27, 2017 I did not realize that feedback would come back so rapidly. Way to go LC. I owe you one. Link to comment Share on other sites More sharing options...
SharperDingaan Posted March 27, 2017 Share Posted March 27, 2017 Interesting paper, certainly applies to this board as well: http://www.cs.ucsb.edu/~ravenben/publications/pdf/echo-icwsm17.pdf Abstract: We examine the quality of information and communication in online investment discussion boards. We show that positivity bias and skewed risk/reward assessments, exacerbated by the insular nature of the community and its social structure, contribute to underperforming investment advice and unnecessary trading. Discussion post sentiment has negligible correlation with future stock market returns, but does have a positive correlation with trading volumes and volatility. Our trading simulations show that across different timeframes, this misinformation leads 50-70% of users to underperform the market average. We then examine social structure in communities, and show that the majority of market sentiment is produced by a small number of community leaders, and that many members actively resist negative sentiment, thus minimizing viewpoint diversity. To improve generated information content in online investment communities, we suggest designing to increase diversity of opinion, minimize friction around incorporating new information, and provide performance feedback for self-correction. Basically describes the $VRX thread. Describes the various FFH threads as well. Lack of diversity of viewpoint, & pressure to conform to the group think. SD Link to comment Share on other sites More sharing options...
Jurgis Posted May 1, 2017 Share Posted May 1, 2017 I finally read the paper. They have some good results and some very so-so results. First, positives: Resistance to Viewpoint Diversity This is well researched and real issue IMO. These are so so: Poor User Generated Information: sentiment in the discussion boards does not correlate with future stock price movements, and in fact stock trading strategies based on the sentiment in these boards underperform the overall market. This is claimed based on stock prices 5 days ( ! ) from the posting. "Strategies" based on sentiment are really crappy IMO ("buy when someone posts positive sentiment on stock, sell when someone posts negative sentiment"). It would be great if they got some long-er term stock return results. But then it's very difficult to research: what is "long-er term"? When would you buy/sell/etc.? Failing to Incorporate New Information: sentiment in the discussion boards does not correlate with recent past stock price movements. This is also not very useful. Clearly if you are value investor, you would have a positive sentiment on dropping stock. Or not. Depends on the reasons for drop. So correlation is not expected and lack of it does not show much if anything. Mistimed Activity Adds Noise: posting activity correlates positively with future stock trading volume and volatility. This might be true. Not sure it is useful insight. BTW, there might be 3rd cause that is real cause of both posting activity and future trading volume and volatility. In other words, correlation, but not causation. (At least they don't claim causation :) ). Link to comment Share on other sites More sharing options...
rkbabang Posted May 2, 2017 Share Posted May 2, 2017 Poor User Generated Information: sentiment in the discussion boards does not correlate with future stock price movements, and in fact stock trading strategies based on the sentiment in these boards underperform the overall market. This is claimed based on stock prices 5 days ( ! ) from the posting. "Strategies" based on sentiment are really crappy IMO ("buy when someone posts positive sentiment on stock, sell when someone posts negative sentiment"). It would be great if they got some long-er term stock return results. But then it's very difficult to research: what is "long-er term"? When would you buy/sell/etc.? Breaking News: Shocking new research shows that online discussion board posters can not accurately predict the 5 day movement of stock prices!!!!! Link to comment Share on other sites More sharing options...
DooDiligence Posted May 2, 2017 Share Posted May 2, 2017 Poor User Generated Information: sentiment in the discussion boards does not correlate with future stock price movements, and in fact stock trading strategies based on the sentiment in these boards underperform the overall market. This is claimed based on stock prices 5 days ( ! ) from the posting. "Strategies" based on sentiment are really crappy IMO ("buy when someone posts positive sentiment on stock, sell when someone posts negative sentiment"). It would be great if they got some long-er term stock return results. But then it's very difficult to research: what is "long-er term"? When would you buy/sell/etc.? Breaking News: Shocking new research shows that online discussion board posters can not accurately predict the 5 day movement of stock prices!!!!! How do they do a decade out? I say they as though we are not they... Link to comment Share on other sites More sharing options...
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