Social Media Management May Join The Ranks Of Investment Bankers And Traders
Social media management and online marketing on social networking websites like Facebook and Twitter have more to do with big finance than most people know. High frequency traders in the financial industry are looking at people’s Tweets and posts to try and anticipate market moves before they happen. Facebook and Twitter may be on their way to becoming just as significant as traditional business news providers in the financial world. Major news and financial information providers such as Bloomberg, Dow Jones and Reuters now offer services that screen market news from social networking websites. A lot of news about a corporation is made through a social media agency, search engines, and online marketing sites. There is a lot of information available through social media websites like Facebook and Twitter about products and services that turns into news later on. Traders and investors on Wall Street are beginning to realize that to find out what will be news tomorrow you have to look at what is trending in social media today.
Consumers from all walks of life and different places around the world can be reached on social networking websites. People Tweet and post about everything from the weather, sports and TV to politics, traffic, and what they had for lunch yesterday. Trendy topics in the social media world reflect popular sentiment and what people are thinking about. Financial firms want to exploit this well of information to improve market predictions. Many investors and traders believe that Tweets can be an effective tool but there needs to be a system in place for analyzing and deciphering social media content.
The basic problem with unstructured web content on social media and online marketing sites is that it is intended to be abstract and not written by analysts. Locating and gathering valuable market data from Tweets and posts would necessitate a whole new genre of financial analysts who double as social media gurus. Some financial big wigs feel that using social media to make market predictions is too risky and not worth the time. Still social networking sites like Twitter and Facebook and search engine feeds could help investors identify and manage risk more effectively. Investors are also hesitant to place a great emphasis on using Facebook and Twitter because the websites are a third party. Market watchers traditionally get their information directly from the source. They want inside information from a dependable informant and are concerned about lag and credibility with social media and online marketing sites.
The idea of trading on Tweets is not likely to take off in the near future but it is being discussed in financial circles. Peter Van Kleef, the managing director at Lakeview Capital Market Services, told CNBC that social networking sites have potential for market watchers because they transmit people’s attitudes and sentiments about products, services, and the current state of things. But he also doubts that social networks in their present form are an efficient tool for the financial industry. Mr. Van Kleef and many other financiers feel that for big investors and institutional funds to trust social networking sites as a measure of market sentiment there must be more sophisticated analysis. Platforms and frameworks must be constructed so it is easier for market watchers to actually get to the source of information and actually quantify and qualify that news.
Many people do not realize the potential market value of their Tweets and posts. Traders and investors are probably better off that people do not know that the financial industry is considering the value of social media sites for making financial decisions. People tend to be more honest when they think big brother is not paying attention. Financiers look for honest informants and information to make important investment decisions so it will be interesting to see how the industry goes about using social media as a market measurement. The moral of the story is that the worlds of finance and social networking are gradually colliding.
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