The Age of Stockal Media Cometh

© Stockal 2015

In order to understand this better, let's look at a few factors which tend to impact stock

prices and see how information for each can be discovered on social media.

Index movement: Movement of any stock index is a representation of the movement of the

underlying stocks. So if you hear enough times, from enough or highly credible social sources

that the index is likely go up (or down) - making the sentiment bullish, assume that the stocks

that make up the index, and similar stocks, by extension, are equally likely to move up (or

down) as well. In order for you to discover such info, you need to be following credible social

media handles, forum threads and blogs that talk about the index.

Definition

Stockal Media = (Stock Market + Social) Media

THE AGE OF STOCKAL MEDIA COMETH

We define "Social", here, as a combination

of popular platforms like Twitter, StockTwits,

eToro, Facebook, discussion forums like

SeekingAlpha, commenting platforms like

Disqus and LiveFyre, and blogging platforms

like Tumblr, Wordpress and Blogger.

Over the past 2 years it's has been proven,

with a fair degree of certainty, that things

(news, opinions etc.) reported on social

media impact stock prices. The crucial thing

here, as a trader, is to be able to spot

whenever such information emerges.

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The Age of Stockal Media Cometh

© Stockal 2015

Company's Financial Health

Most seasoned investors, before making a decision to buy a stock, look at the financial

health of the company the stock represents. Did the last earnings call set a positive

mood? Does the sales pipeline or potential customer acquisition look strong? Has the

company been able to pay regular dividends? OR Is a successful CEO going to move

out? Is a potential law suit brewing against the company? Is it in discussions to make a

large acquisition? These are just some of the questions you need answers to –

constantly.

So, how do you track? Well, determine who the key executives of the company are and

follow their social handles. See if someone hints at a new customer meeting. Track

what the investor relations team of the company is telling traders on platforms like

Linkedin or StockTwits. Track the customer sentiment and chatter for the company's

products by looking at Twitter interactions between customers and the company's

social media support handles. Track what the company's representatives in technology

or industry events are saying.

Industry Outlook

A company’s stock price may go up or down depending on

whether investors and analysts think its industry is

expanding or contracting. So if a company's financial health

is fine but the industry is not growing then there's reason to

believe that the company may not be able to sustain its

growth. This is likely to lead to a fall in stock price over a

medium-term period.

So how do you know which way an industry is headed? Best is follow industry analysts,

wherever their social presence. You are most likely to find them on SeekingAlpha and

Twitter. But interestingly, a number of them blog quite heavily – such folks may not be

accredited analysts from large organizations, but they have a history of making correct

estimates when it comes to industry performances. These can be discovered through

blogging platforms, comment threads and discussion forums. It's almost certain that

they have a reasonable Twitter presence as well.

The Age of Stockal Media Cometh

© Stockal 2015

Economic Trends

When key economic signals point to a

healthy and growing economy,

unemployment is low, inflation and

interest rates are under control, people

have more money, they buy more and

companies are likely to make more money.

Future of companies looks bright and they

are looking to scale-up. Conversely,

negative signals indicate a contracting

economy, joblessness and therefore less

money for companies. Stock market moves

almost always in conjunction with the

predicted movement of the economy.

While some these key economic signals,

indicators – if you may, are easy to track

from federal government sources and

organized media. These are the likes of CPI

(Consumer Price Index), Gross Domestic

Product (GDP), Budget Surplus, Inflation,

Central Bank Interest Rate Federal Tax

rates and Unemployment Rate.

But since everyone has access to such

data, there is no big market advantage

that a trader can easily derive. It is

interesting, though, when you are able to

track some of the signals or conversations

which “could” predict any or all of these

indicators. For this, it’s important to know

who the opinion makers are. These could

be individuals or small think tanks or

consulting

organizations. These could also be a

combination of conversations on a

discussion forum or thread. A trader

or analyst could do well to follow

these sources of information and

analysis across social media. One can

also do a larger “mood of the crowd”

analysis to determine if the overall

sentiments are positive or negative.

For instance, if a lot of people are

happily talking about new purchases

and new jobs then it’s likely that the

economy is looking good as well. If

loan departments of banks are doing

well and their future outlook

remains positive (info you can get by

following their key people, customer

outreach handles and digital

advertising) then people are taking

more loans – and are therefore

confident of paying the same back,

indicating good jobs prospects and

continued employment. A lot of this

data and analysis can be gleaned

from networks like Facebook,

Twitter and Linkedin.

The Age of Stockal Media Cometh

© Stockal 2015

Geo-political Events (National & International)

Quite often, it has been seen that news related to international events has an impact

on stock markets in general and quite often, this impact spreads across multiple

markets in multiple geographies. For instance, when a Malaysian Airlines flight was

struck down on the Russia-Ukraine border, it created a mood of global political

instability that lead to a minor slowdown in growth of stock markets and in turn, lead

to increased investments in Gold (because of the inherent stability associated with

Gold as a commodity). Similarly, if a US-based company is largely dependent on exports

to, say, the Asian market and there is unrest in a major Asian economy, the company’s

stock performance is likely to be negatively impacted.

Such information can be discovered quite easily on organized media. But it may be too

late, by then for a trader to take an advantageous position. One can follow specific

keywords on social media and lesser known websites (through search engines) to

discover useful nuggets of such information. For instance, if a major illness strikes, it is

quite likely that you’ll read about it on Twitter before reading about it on New York

Times.

Company Related Events

A key employee being hired – say a new CEO or

Sales Head. Brand receiving glowing feedback or

awards. A massive layoff. An overall

organizational restructuring. A new product

launch or new market entry. An acquisition or

new partnership. These are just some events

that have a high likelihood of impacting stock

prices.

Events like these and more can be discovered

on social media by following key employee

handles, platforms like Linkedin and Glassdoor,

Twitter handles or analysts and bloggers and

credible blogs written by employees as well as

outsiders who are enthusiastic followers of and

commentators on the industry the company

belongs to.

For more on how analysis of unorganized data can help you invest better, reach out to us at

research@stockal.com

Or follow Stockal at twitter.com/getStockal