Investors look to social media for clues on market direction

This transcript is automatically generated

Well there's a new way investors can get a leg up on the market the idea is to get investment clues from what people are saying on line.

For example taking a look at the overall mood are people worried or excited about something.

One study found that what folks are tweeting blogging or FaceBook -- about can actually predict which -- the Dow will -- sometimes.

Days in advance.

Investors also keeping a close eye on our chatter what we say about products and services and companies in online reviews.

When University of Southern California researchers sold stocks based on negative reviews they earned 8% more.

And for some investments that can translate into millions.

It's one individual that is not going to move the market but sometimes -- individuals might stop the conversation.

-- -- -- -- people's experiences.

They've bio on.

Still mall buzz.

Explain some on that particular event of that issue.

I'm -- -- begins to move market.

There are actually companies that specialize in finding these indicators.

Market site in Santa Monica California scours the Internet looking for anything uttered about a company good or bad.

Is in sells those findings to hedge funds banks and brokerage firms.

And like anything with the stock market it is risky but it could pay off for someone who is willing.

To play the game -- -- looking for our indicators of some big event comic.

Now a lot of the time you'll be wrong.

You might -- only 50%.

Directional accuracy so to speak.

But when you catch those big events if you're right 10% of the time and you can't really big event like the financial crisis or -- the bankruptcy of Lehman Brothers.

That type of event will make your profits or even the year investors have always tried to get into the brains of consumers but nowadays with so many of -- sharing our thoughts and opinions on line.

It makes it a whole lot easier.

In Los Angeles Casey Stegall Fox News.

Watch Live

Investors look to social media for clues on market direction

Details

Clips

Latest Business

Critics question union influence amid IRS scandal

IRS scandal fueling new calls for flat tax

Unions backing away from ObamaCare?

Government jobs as certain as death and taxes?

Target aiming at your personal data?

Car sales rev up the economy

Biz Headlines: 5/23

Biz Headlines: 5/22

Biz Headlines: 5/21

Yahoo! Strikes Deal With Tumblr

Will Washington scandals derail Wall Street run?

Time to rethink the IRS?

Transcript

Recommended