Three Types of Social Media Sentiment on Financial Assets

Social media sentiment related to financial assets like equities, commodities, cryptocurrencies, or market indices has become a critical element in the investment analysis field. However, not all sentiment is the same. In this article, we discuss three major types of social sentiment - sentiment generated by finance influencers, sentiment generated by the wider social media user community, and sentiment generated by major industry news and analytics portals and shared via their social media accounts. We will delve into the specifics, differences, pros, and cons of each type.

1. Sentiment Generated by Finance Influencers

Finance influencers have emerged as prominent figures in the social media landscape, sharing their insights, opinions, and recommendations on financial assets. These influencers are typically individuals with a significant following, expertise in finance, and the ability to sway market sentiment in non-trivial ways. Here are some key characteristics of sentiment generated by finance influencers:
- Influencers often provide real-time updates, market analysis, and predictions about financial assets. For many of them, being up-to-date is a critical element of their personal brand.
- They rely on their expertise, technical analysis, fundamental analysis, and personal experiences to shape their sentiment.
Distinct Features:
- Finance influencers have a more personalised touch compared to other sources, as their sentiment reflects their individual perspectives and strategies.
- They often target specific niches or investment styles, catering to the preferences of their followers.
- Influencers may promote specific assets or investment strategies based on their own interests or financial partnerships, i.e., they are not necessarily living monuments to impartiality.
- Finance influencers provide insights and analysis that can be valuable for investors seeking alternative perspectives or investment styles.
- Their real-time updates and market predictions can help investors make informed decisions and stay updated with the latest market trends.
- Finance influencers foster a sense of community among their followers, allowing for interaction, discussion, and learning from one another.
- Some finance influencers may lack the necessary expertise or qualifications, leading to potentially misleading or inaccurate information.
- Influencers might have biases or conflicts of interest, making it essential for investors to conduct their due diligence before making investment decisions.
- Overreliance on influencers' sentiment without considering other sources of information can result in a narrow perspective.
- In the era of generative AI technologies, some influencers might resort to producing mass content using these technologies. Unfortunately, the generative AI content might be far from being factually true or well thought out; it simply sounds well written.

2. Sentiment Generated by the Wider Social Media User Community

The wider social media user community comprises millions of individuals who express their opinions, experiences, and sentiment about financial assets. This type of sentiment is more decentralised and represents a diverse range of viewpoints. Let's explore its specifics:
- Social media platforms like Reddit, Twitter, and Facebook serve as hubs for discussions about financial assets, with users sharing their thoughts, insights, and experiences.
- Users express their sentiment through comments, posts, likes, and shares, creating a dynamic and interactive environment.
- Sentiment analysis tools and algorithms are employed to monitor and gauge the overall sentiment of the community.
Distinct features:
- The sentiment generated by the wider social media user community is a collective voice that reflects the opinions and experiences of various individuals.
- It provides a broad spectrum of sentiment, allowing for a more comprehensive understanding of the market.
- The sentiment is frequently affected by the finance influencers’ opinion discussed above, though it is not necessarily mirroring it.
- The wider social media user community offers more diverse sentiment and opinions than you would find on influencer or news outlet accounts.
- The diversity of perspectives and experiences can help identify emerging opportunities and potential risks. A great insight might originate from a single low-key user, not necessarily from a major publication or popular influencer.
- Sentiment expressed by the wider social media user community can be influenced by herd mentality and emotional biases, leading to irrational market behavior.
- False or misleading information can spread rapidly through social media, potentially creating panic or misinformation among investors.
- The lack of expertise and accountability among social media users can make it challenging to distinguish between reliable information and unqualified opinions.

3. Sentiment Generated by Major Industry News and Analytics Portals

Major industry news and analytics portals play a vital role in disseminating financial information and market analysis. These portals often have dedicated social media accounts through which they share their insights. Here are the specifics of this type of sentiment:
- News and analytics portals, such as Bloomberg, CNBC, Reuters, and Financial Times, provide highly professional analysis, market reports, and news updates related to financial assets.
- These portals utilise their expertise, industry connections, and access to rare data to generate sentiment.
- The sentiment is often based on thorough research, interviews with industry experts, and analysis of market trends and data.
Distinct Features:
- Sentiment generated by major industry news and analytics portals is typically more objective and fact-based compared to sentiment from influencers or the wider social media user community.
- These portals aim to provide comprehensive coverage of financial markets, catering to investors of all types, from large institutionals to retail investors.
- Sentiment from major industry news and analytics portals offers reliable, well-researched information that investors can generally trust.
- These portals have access to valuable resources, including interviews with industry experts and in-depth market analysis, providing a comprehensive overview of financial assets.
- The sentiment generated by reputable news portals can have a significant impact on market trends and investor sentiment. The market listens to this sentiment more than to the sentiment generated by even the most influential among individual influencers.
- Despite efforts to remain objective, news portals may have their biases or affiliations, which could influence the sentiment they generate.
- The analysis provided by industry news portals may not always be timely enough to capture fast-changing market dynamics. The need to cross-verify the authenticity of each piece of info and the large, often hierarchical nature of these publishing behemoths might affect their speed of operation.
Taking into account the source of social media sentiment on financial assets can help investors fine-tune their strategies and identify valuable insights. Our social media analytics platform, PUMP, provides all the necessary tools for such fine-tuning. Social sentiment metrics generated by PUMP can be filtered to consider the opinion of only influencers or, alternatively, of the wider social media community discussing financial assets. Additionally, PUMP’s news feed section helps you sense the sentiment generated by major, trusted publications. Using such fine-tuning can take your social sentiment analysis to a completely new level.