Twitter Failure

7/28/2019 Twitter Failure

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WALL STREET 4/24/2013 @ 6:30 | 686 views

Mining Twitter for picking stocks has crashed and burned in London, gotten

the nod from the SEC, and caused yet another gut-wrenching lesson in the

dangers of electronic markets.

DCM Capital started a Twitter Fund in July 2011 with respectable assets,

reported up to 20M pounds. Derwins had a secret sauce to measure Twitter

sentiment of stocks to predict the movements of the broader market. The

Twitter Fund failed last summer, and the whole kit-and-kaboodle was

auctioned off in February forwhopping $186,000.

Waters WAT+0.11% reports:

The sentiment analysis sounded like fun, there was anxiety, fear, happy, sad

and lots of NLP (natural language processing) derived moods. Computers

are pretty good at pulling apart language. Derwins sad fate is another in the

long line of GIGO (Garbage In Garbage Out) flame outs. Have you actuallyread what comes over Twitter? Plus, they are magnets for grey area cons.

Just like the dutch coffeehouses, and countless wall street bars, and stock

message boards, Twitter is going to have either a low signal to noise ratio if

you are being polite, and a lot of BS if you are not.

Messing with what people hear is nothing new. Joseph de la Vega, in

Confusion de Confusiones, wrote of the Amsterdam Stock Exchange over

300 years ago (1688):

The greatest comedy is played at the Exchange. There, . . . the speculators

excel in tricks, they do business and find excuses wherein hiding places,

DCM Capital has sold for 120,000 ($186,000), a fraction of its 5 million guide price, in a

unique auction.

The sentiment analysis provider, which was launched by Paul Hawtin in May 2012 following

the dissolution of his Twitter Fund, sold yesterday to the highest bidder at the end of a

two-week online auction. The winning bid came from a financial technology firm, which

Hawtin declined to name.

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David Leinweber, Contributor

I write about markets of all flavors and computers that want your job

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are to be found.

While the Twitter -driven fund is no more, there is on the other hand news

from the SEC, which has given the OK for CEOs and other corporate officers

to talk to investors over Twitter and other social media. Maybe Derwin was

ahead of their time.

Yesterday, we had a reminder of why this may be a bad idea. At 1:08pm, theAssociated Press sent out a Tweet based on bogus information that two

bombs had gone off at the White House, injuring the President. The Dow

Jones Industrial Average dropped 145 points in a minute, recovering by 1:10.

Those odd minutes of trading are shown below. If this doesnt remind you of

the Flash Crash, it should.

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I'm the author of "Nerds on Wall Street: Math,

Machines and Wired Markets" and founder of the

Lawrence Berkeley National Laboratory

Computational Research Division's Center for

Innovative Financial Technology, created to help

build a bridge between the computational science

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founder of two financial technology companies

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