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Social Momentum Predicted The Election Correctly, And This Social ETF Is Gaining

Thursday, November 10, 2016 12:33
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Although Donald Trump’s victory in the presidential elections came as a shock to pollsters, “expert” analysts, and media pundits, it was not as surprising to the social media collective.

For several days, even weeks, numerous social media analytic companies have reported that the sentiment of people measured across social media towards the two candidates has skewed towards Trump. Going forward, pollsters and analysts would be wise to pay more attention to the sentiment of the social collective, as it can provide valuable insight and account for factors missed by traditional methods, which suffer from limitations including response bias and low incentive for truth telling. In contrast, opinions on social media platforms are made voluntarily, and can be much more predictive of the population.

While the Buzz Social Media Insights Index (BUZZ), tracked by the Sprott Buzz Social Media Insights ETF (NYSE:BUZ) does not monitor or analyze sentiment on the elections, it does however capture the sentiment that people exhibit towards stocks and investments, which is ultimately related to their views on such events. On the trading day following the election, BUZZ outperformed not only the S&P 500 Index, but also price momentum strategies such as the iShares Edge MSCI USA Momentum Factor ETF (NYSE:MTUM).


In particular, biotechnology stocks rallied sharply with the defeat of Hillary Clinton, who has been critical of drug pricing policies and viewed as a negative factor for the industry. BUZZ had been overweight biotechnology stocks, reflecting the positive social momentum towards the industry leading into the elections.

About the Author: Jamie Wise
jamie-wiseJamie Wise is the Founder of BUZZ Indexes and the President and Chief Executive Officer of Periscope Capital, a Toronto-based hedge fund manager. BUZZ Indexes creates and maintains proprietary quantitative index and portfolio strategies based on Big Data analytics models. Established in 2009, Periscope Capital is an alternative investment asset manager focused on cross-asset arbitrage strategies. Previously, Mr. Wise was a managing director at Moore Capital Advisors Canada, a multi-strategy Canadian-focused hedge fund. Prior to Moore Capital, Mr. Wise was a Managing Director and Portfolio Manager at the Bank of Montreal where he led an internal proprietary trading group. At BMO, Mr. Wise was appointed the youngest Managing Director in the firm’s history. Mr. Wise has an undergraduate business degree (hons.), graduating first in his class from the Ivey School of Business at the University of Western Ontario in 1998. Mr. Wise holds a Chartered Financial Analyst (CFA) designation.
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