(New York)

As if there were not enough worrying indicators out there, Market Watch has featured a new worrisome measure. The paper interviewed a famous Wall Street quant who says that algorithms which track broad social media sentiment are showing significant risks of a serious decline in equities. The big worries on the public’s mind revolve around the escalating trade war between China and the US. The indicator also informs sector picks, to which strategist Yin Luo said “With U.S. stocks, we are bullish consumer discretionary, technology, and industrials over the medium horizon, and are negative on consumer staples and telecom services, where fundamentals remain relatively weak and momentum has been negative”.

FINSUM: We are always skeptical of these kinds of views because what people say on social media is not a very good reflection of what they are doing in their investment account. Further, there are likely mountains of people being assessed by the algorithms that have no trading/investment account, so their impact is nearly non existent.