Brain Vibe

If social media is really an indicator of consumer and market sentiment, how can monitoring individual and peer influence shed light on economic health?

CNNMoney.com pushed out a piece, “Why the Experts Missed the Crash” with an interview of Philip Tetlock, professor of organizational behavior at the Haas Business School at the University of California-Berkeley and the expert on experts.  In the article a comment caught my eye since I had recently finished reading a white paper from Edelman Digital.

CNNMoney.com stated:

“You’re probably still entrusting your portfolio to the experts running mutual funds. Despite everything, we can’t shake the belief that elite forecasters know better than the rest of us what the future holds.”

Here’s the thing, when you look at how people gathering information and making decisions on this information, the trusted source is not the experts and vendors, it is the peer they are turning to.

Steve Rubel of Edelman Digital explains this in terms of how people are filtering their information as they are bombarded by it.

“(P)eople are coping by the increased reliance on peers, rather than pros for news.”

This got me thinking.  Investment banks and mutual fund companies have lost the trust of the consumer – yes, I’m stating the obvious.  But, what if by leveraging Edelman’s Social Media Index you could gain insight on who influenced stock and mutual fund performance?  Could this also help to determine market trends that would predict bull and bear markets?

Steve Rubel says:

“(M)ost consumers generally Google for problems not solutions. They tend to be very mission-oriented. Delve into what they find around high value keywords. In addition, consider how the search engine result pages influence the opinions that media and bloggers might form when writing stories in the future.”

The other aspect is, what if fund managers and analysts leveraged Google in the same manner that consumers do to solve problems?  I’m assuming that Google is probably already a big part of their research – maybe.  So, what would monitoring of social media and networks do for them to predict when to buy, hold, or sell?

If you think this is a bit out there, consider for a moment that the financial industry has already been leveraging online behavior analysis at companies like Compete.com and ComScore Networks to predict markets.  Paring blind behavior analysis with commentary from blogs, tweets, and comments just may provide a richness of information that truly can predict if our markets are on the right course.

Filed under: social media, Business, Compete.com, edelman, edelman digital, finance, forecasting, Google, individual influence, influence, invest, Investment Banks, Market trends, Philip Tetlock, social media, social media analysis, social media index, social media metrics, social networks, Steve Rubel, stock market