written by Alessio Garzonio
FinScience Alternative Data to detect small investors sentiment and movements as well as long-term trends.
Social media, retail investors and hedge funds are the key topics in Wall Street these days. Retail investors (coordinated on Reddit) started a fight against hedge funds by buying stock heavily shorted by them as Gamestop, AMC and Bed Bath and Beyond. r/wallstreetbeats (the subreddit used by these retail investors) war against hedge funds is a strong phenomenon of democratization in the investment sector where a coordinated group of small investors have caused heavy losses to big investments firms.
Redditioners battle is a short-terms market manipulation not validated by stocks financial/fundamental performance in many cases (for example GameStop). The real important takeaway from this event is that retail investors are a “real force in the market that is here to stay” and it’s wrong to assume that all those investors are unsophisticated.
Indeed, retail investors have made a huge increase in the last year, thanks to the diffusion of trading no-commission platforms such as Robinhood and the good performance of the 2020 stock market. Retail investors are important not only for their influence on the market but they are news/valuable information spreaders through social media platforms such as Twitter, Reddit and Stocktwits.
For these reasons, it is extremely relevant to detect these retail short-term movements on stocks as well as long term trends/stock that those investors like and invest in. FinScience data collects everyday data from different data sources as well as data from social media platforms such as Twitter, Stocktwits and Reddit in order to detect emerging trends in the market and valuable stocks as the ones identified in the 2020 Trend & Event Driven Selections.