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London Hedge Fund Uses IU Prof’s Twitter Stock Research

A British hedge fund is placing its bets with an IU professor's discovery.

A London hedge fund has partnered with an Indiana University professor who discovered a link between people’s moods in their Twitter feeds and corresponding moves in the stock market.

With the help of a student, professor Johan Bollen showed that the words in people’s Twitter feeds can predict, several days in advance, whether stock markets will buy or sell. He said his theory has proven true even during this week’s wild price swings.

“That’s what we’re seeing in our data,” Bollen said. “I got an email this morning from my colleagues in London, and they confirmed they just made a good amount of money on today’s fluctuations.”

The colleagues are from Derwent Capital Markets in London – a hedge fund run by a pair brothers in their twenties. The brothers are using Bollen’s metrics to help inform them on the best bets in the markets.

Bollen declined to say how much money the agreement could be worth to him and his new company, Guidewave Consulting, but he did indicate the company should grow from the first year’s earnings.

“From what I gather, the initial results were very good, so I expect quite a bit of money to be made,” he said.

The venture should make money for IU as well Bollen said because the school paid for an equity stake in the professor’s company and offered to help foot the bill for some of the computer hardware and legal fees necessary to begin the project.

Stan Jastrzebski

WFIU/WTIU News Senior Editor Stan Jastrzebski spent time as a reporter with WGN Radio in Chicago and as an editor at Network Indiana, an Indianapolis news service. Stan is the winner of awards from the Associated Press, the RTDNA, the Indiana Broadcasters Association and the Society of Professional Journalists. He hosts WFIU's Ask the Mayor and anchors WTIU's InFocus.

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