As you guys know, share prices are subject to many factors, if only we could accurately predict their movements we would have a model for great wealth. However, it hasn't been done successfully.
But, there are many individuals who have very simple methods for determining a stocks movement based on a lot of leg work and common sense. Even the volatile penny stocks have seemingly been mastered by the likes of Timothy Sykes' who analyses headline news and fake promotional campaigns before buying or selling shares.
I began to research and found plenty of scientific papers showing clear relationships between headline news and stock prices. Here is a great one: cse.ust.hk
But there is something else at play, something else that must be considered when trying to predict stock prices, and that is understanding what the general perception of a stock is. So for example, if company 'XYZ' announced a merger, and the papers hint that their shares will go up by 5% we could assume it would be right to invest ... but if the general belief was that they were going to go up by 7% even without a merger then we'd be wrong.
So, the answer must be to plot both the news headlines and general perception. I would mix in common sense factors that tell me how good a company is, like the standard of their management, customer support, net earnings etc. All obvious stuff.
So why am I saying all of this? I actually put the word out there a few weeks ago to find individual who might want to get involved with creating a program to predict (or increase the odds) stock prices. Amazingly I now have a computer programmer, English word expert and an extremely qualified statistician. We now need a few more people including someone who is very experienced with the stock market.
My thinking is that if we knew what bits of information were important, we could use the computer program to collect that information. It would be us (humans) analysing it, but the computer program would act as a tremendously useful tool. Can you help us create this 'tool'?
I find the pump and dump analysus that Timothy Sykes does very interesting. The computer program could harvest information that is critical to understanding if a stock is being hyped.
Please get in touch with your thoughts and let me know if you would like to get involved. |
