Learn why using a social media monitoring app such as LikeFolio can help you monitor sentiment.
Politicians. CEOs. Media personalities.
What do these three very different groups of people have in common? All of them can influence the markets and individual stock prices with their social media posts.
Think back to late last year when then President-elect Donald Trump tweeted, “The F-35 program and cost is out of control. Billions of dollars can and will be saved on military (and other) purchases after January 20th." Shares of Lockheed Martin (LMT), which manufactures the F-35s, dropped immediately, (though shares subsequently rebounded). See figure 1 below.
Trump’s tweet grabbed the headlines, but a lot of stuff on social media doesn’t necessarily fly as high on the radar. Now, LikeFolio offers an online social sentiment app that does the social media monitoring for you, letting you select key influencers to follow in real time on your mobile device so you never miss their impact on your stocks.
“To put it simply, social media activity can potentially impact the stock market; both individual companies and entire stock indexes,” said Patrick Smith, senior manager of trader and education marketing at TD Ameritrade. “Sometimes a social media post can move shares of a stock dramatically within minutes, before the news becomes widespread, making it helpful for investors to have this information immediately.”
FIGURE 1: MAYDAY!
A December 12, 2016 tweet by President-elect Donald Trump sends shares of Lockheed Martin down about $14 a share, though shares later recovered. Data source: Twitter, S&P Global. Chart source: The thinkorswim® platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.
You may have heard of crowdsourcing, which some investors now use to collect information from the masses of people on the Internet. LikeFolio also scours the Internet for information, but in a different way.
“The app is pretty simple; it allows you to follow key influencers that impact markets, and or their specific companies,” Smith said.
Once you download the app, you can choose from a long list of key influencers, along with the stock symbols you want to monitor. Politicians, CEOs, and news personalities are certainly well represented, but so are others with the power to move stocks, including popular culture icons. You can also choose to monitor a media outlet rather than an individual, so that, say, when a major newswire mentions your company in any of its online channels, you’re informed.
The app can also put you in the front row for online arguments like the one between high-profile investors Bill Ackman and Carl Ichan last year regarding Herbalife (HLF), an example of which is shown in figure 2 below. You’d never miss a punch or a counter-blow.
FIGURE 2: DIFFERING VIEWS, PLAYED OUT IN SOCIAL MEDIA.
An Ackman post regarding Icahn’s positions in HLF sent shares sharply lower. Icahn’s rebuttal, issued near the close of the trading day, sparked a rally that lasted into the following trading day. Data source: Twitter, S&P Global. Chart source: The thinkorswim® platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.
Some investors might ask why they should care. There’s a lot of noise in the social media world, and not all of it affects markets. It’s also possible to sometimes get too caught up in social media, as anyone with a teenager at home probably already knows.
On the other hand, there are numerous examples besides Trump’s tweet about LMT where individual stocks or the market as a whole moved based on a social influencer, and investors today might find themselves handicapped if they don’t have a way to monitor this buzz. In 2013, for instance, a fake tweet from a major newswire caused a 147-point drop in the Dow Jones Industrial Average ($DJI) followed by a 126-point rebound, all within seven minutes. On another occasion, Apple (AAPL) gained $17 billion in market cap within minutes after an influential investor tweeted he owned a large position.
Many well-informed investors already have begun equipping themselves with the tools to keep an eye on developments like these. The LikeFolio app is a way to attempt to make sure you’re not left out of the loop the next time a tweet puts the focus on one of your stocks.
for thinkMoney ®
Financial Communications Society 2016
for Ticker Tape
Content Marketing Awards 2016
Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type.
Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.
TD Ameritrade and all third parties mentioned are separate and unaffiliated companies, and are not responsible for each other’s policies or services.
Inclusion of specific security names in this commentary does not constitute a recommendation from TD Ameritrade to buy, sell, or hold.
Posts presented in the Likefolio app are not subject to any fact-checking, may be without reasonable basis and claims may be unsubstantiated. Thoroughly evaluate all information before trading
The social data discovery, filtering and analysis discussed in this article are provided by SwanPowers, LLC’s Likefolio. SwanPowers and TD Ameritrade are separate and unaffiliated firms.
We also invite you to read this Investor Alert: Social Media and Investing: Avoiding Fraud published by the SEC.
Market volatility, volume, and system availability may delay account access and trade executions.
Past performance of a security or strategy does not guarantee future results or success.
Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.
Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.
This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.
TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2020 TD Ameritrade.