Twitter Beats the Stock Market

Hedge Funds look at all sorts of data to gain an edge over the market. The ideal market insight tool you might imagine would be some sort of micro-blogging platform, where millions of people would express how they are feeling at any point in time. ie. - Twitter.

It seems Derwent Capital have done just that. Using a paper that came out of University of Manchester and Indiana University, which found a correlation between mood and Twitter.

The number of emotional words on Twitter could be used to predict daily moves in the Dow Jones Industrial Average. A change in emotions expressed online would be followed between two and six days later by a move in the index, the researchers said, and this information let them predict its movements with 87.6 percent accuracy

The Derwent Capital algorithm specifically looks at the level of calmness on Twitter.

Their results showed that rises and falls in the number of instances of words related to a calm mood could be used to predict the same moves in the Dow’s closing price between two and six days later, with a fall in these “calm” words being followed by a fall in the index. The other moods did not have the same predictive quality, the paper said.” Specifically, it looks for words like “alert,” “happy,” and “vital,” adds Financial News’ Michelle Price. “Derwent Capital scans a selected 10% of available tweets at random and will then categorise these messages into one of a range of mood states.

It is only in its first month, but the fund has already considerably beaten the market average. If some sort of feedback loop could be added (which can lead to dangerous spirals), or as various tweaks are added, this could rise considerably. Stay tuned - we’ll let you know.

Change Your Finances through 10 Counterintuitive Willpower Tricks

Poverty has many causes, not all of it under our self control. But the latest research on willpower has some surprising and useful insights for anyone wishing to change their financial situation.

In a nutshell, the poorer you are, the more stressful every purchasing decision necessarily is. “Shall I buy lunch today, or make my own?” requires some trade-offs, but “shall I buy a new car, or get private Health Insurance?” has much more. The rich have the luxury of making similar decisions based on fashion, taste, or competing benefits.

Recent research shows that such decision-making can be not only emotionally taxing, it can be intellectually taxing, too. The more of these types of decisions you are forced to make, the worse your later decision making becomes. Subjects in psychological tests were shown to do worse in IQ type exams after being asked to make a simple financial decision - such as whether or not to buy some soap that was on offer.

The effect was greater the lower the subjects’ income levels were. “Poverty may reduce free will, making it even harder for the poor to escape their circumstances.” says one researcher. Poverty is, then, a particularly difficult Catch-22 to escape from.

So, what can we do about it? Here are some tips to using this knowledge to your benefit:

1. Lock yourself into savings plans and long term deals, that not only save you money - they remove such decision making in your week, month, or year. This will increase the amount of willpower you have in other areas of your life, and hence the intelligence you apply to other financial decisions.
2. If you find it difficult to avoid distractions such as the internet, TV, or eating, find a workplace where these things are not on offer. You will have to exercise self control less, and your intelligence, willpower and bank balance will increase, as a result.
3. Have a routine. If you know exactly what you will be doing on a saturday morning, monday night, or sunday afternoon each week - it will go a great distance in lessening stresses on how you spend your time. The same is doubly true for your work week.
4. Opt to pay bills automatically, if your bank and service provider offers it. This will allow you to focus on other, more important financial decisions.
5. Make a list of things that will save you time. Where you spend your minutes is another taxing act of willpower, and any benefits here will be felt elsewhere. For instance - cook large meals for freezing on the weekend, or buy things like socks, underwear or shirts in bulk.
6. If someone offers you charity (a friend or family member, for instance), don’t balk at having conditions placed on it - such as limits on what it can be spent on, or what you must do in return. If the conditions match your long term goals, these constraints on your own free will can actually benefit you in the long run. They removing desires you would otherwise have to continually reign in.
7. Make use of electronic reminders and calendar alerts. You will sleep better knowing that you don’t always need to be on edge about when a bill is due, or a job application is about to expire.
8. Whilst ’shopping around’ may be a good savings tip, it underestimates the amount of time you are spending worrying about money. Research the cheapest place to buy your groceries, entertainment, books and other expenses and then stick with it - it will make for a much less stressful week. You will be able to think much more about your larger financial situation.
9. Increase your short term willpower regularly by taking a walk, or doing something that makes you laugh - like watching a good film. Researchers have found that these can have important part to play in resetting your will.
10. Divide up spending decisions with a significant other - be it a roommate, partner, or friend. Give them agency over one half of your expenditure (what food to buy, for instance, or where to go out to eat), whilst you take responsibility for the other half. In this way you can halve your strains on your willpower, rather than both suffering. Make sure you choose someone whose decision making you trust!

Can you think of other ways to take the strain out of worrying where to spend your money, or time?

7 Tips For Happy Work

In this TED talk, designer Stefan Sagmeister reveals how he applied one key idea to get more happiness: “do less of the things that make you unhappy, and more of the things that make you happy.” A compulsive list maker, he came up with these seven principles, which guide the work he accepts.

Point number three is “using a wide range of tools and techniques”, and is really a trick to get away from the computer. And point seven involves forcing himself to accept work that half allows the use of skills he is already good at, and half requiring skills which are new. What’s nice is that work here is seen as the heart of happiness, not its antithesis, and that once the job is set up correctly, happiness necessarily follows.

This post originally appeared on Personal Shoplifter.