Tuesday, July 16, 2013

Wikipedia Article Views Predict Stock Market Falls

Here's a very simple, yet intriguing, study on the relationship between Wikipedia page views and stock market returns:
In our analysis, we find evidence of increases in the number of page views of articles relating to companies or other financial topics before stock market falls.
We propose one potential explanation in line with these results. We first suggest that Wikipedia records may provide a proxy measurement of the information gathering process of a subset of investors for the investigated period. We further note that previous studies in behavioural economics have demonstrated that humans are loss averse: that is, they are more concerned about losing £5 than they are about missing an opportunity to gain £5. By this logic, it could be argued that the trading decision of greatest consequence for a trader would be to sell a stock at a lower price than they had previously believed it was worth. If we assume that investors may be willing to invest more efforts in information gathering before making a decision which they view to be of greater consequence, then it would follow that increases in information gathering would precede falls in stock market prices, in line with our results.
The work was led by Tobias Preis, who has a ton of awesome content and research presentations if finance is your area of interest (his website is a little outdated). 

My only question is 'Where's the website for this work?'

Thanks, Gareth!