How Social Media Is Changing the World of Investing

Transcription

1 How Social Media Is Changing the World of Investing Panel Detail: Wednesday, May 4, :30 AM - 10:45 AM Speakers: Chris Albinson, Managing Director, Panorama Capital Scott Burns, Director of ETF, Closed-end Fund and Alternatives Research, Morningstar Tom Lydon, Publisher, ETF Trends Evan McDaniel, Chief Information Officer, MerlinOne Trading Partners Jon Najarian, Co-Founder, optionmonster.com Moderator: Dennis Kneale, Senior Correspondent, Fox Business Network

2 More than 60% of Internet users are on social network sites Millions Social network users (left axis) % of Internet users (right axis) % 66.0% 67.0% % % % % 70% 60% 50% 40% 30% 20% 10% 0% Source: emarketer.

3 8 of the 20 most visited websites are social networks/ social media Top 20 sites 1 Google 11 Windows live 2 Facebook 12 LinkedIn 3 Yahoo! 13 MSN 4 YouTube 14 Bing 5 Amazon.com 15 GO 6 Wikipedia 16 CNN Interactive 7 Twitter 17 AOL 8 Blogger.com 18 ESPN 9 ebay 19 WorldPress 10 Craigslist.org 20 PayPal Source: Alexa.

4 Top social networking sites Average monthly page views, 2010 Billions Facebook MySpace Hi5 Twitter Friendster LinkedIn Bebo LiveJournal Source: Google Ad Planner.

5 Advertisers worldwide to spend almost $6 billion on social networks in 2011 US$ millions worldwide social network ad revenues 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Social games Other 8,094 Twitter Myspace Facebook 5,968 3, Source: emarketer.

6 Social network ad spend continues to rise Facebook ad revenue US$ billions 6 Non-US 5 US U.S. social network ad revenue US$ billions Source: emarketer.

7 Social networks accounts for one-fifth of time spent online U.S. Internet time by category: June 2010 Other 34.3% Social networks 22.7% Online games 10.2% Classifieds/ Auctions 2.7% Videos/Movies 3.5% Software manufacturers 3.3% Search 3.5% Videos/Movies 3.9% Instant messaging 4.0% 8.3% Portals 4.4% Source: Nielsen.

8 On mobile phones, social networks are a distant second to U.S. mobile Internet time by category: May 2010 Videos/Movies 3.5% Music 4.0% Sports 4.1% Entertainment 4.3% Portals 4.6% Weather 2.8% Search 6.3% Other 14.5% News & current events 7.2% 38.5% Social networking 10.7% Source: Nielsen.

9 Social networks are a powerful way to connect with consumers of all generations 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 88% 81% Age % Age % Age % Age 65 and up 46% 44% 31% 30% 31% 26% 21% 23% 20% 16% 17% 13% 14% 17% 15% 7% 7% 10% 7% Facebook YouTube Myspace Twitter Classmates.com LinkedIn Source: Fiserv.

10 Why do you use social networking sites? It's part of my job For professional development Make new professional development For political reasons Keep in touch with professional contacts Get recommendations Find information relevant to me Communicate with like-minded people Meet new friends Express myself and views Reconnect with people Keep in touch with family For fun Keep in touch with friends 5% 6% 9% 9% 19% 25% 29% 29% 32% 39% 68% 70% 73% 88% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: Simmons New Media Study.

11 Customers dissatisfied with social media despite websites popularity The ACSI measures 30 online companies. Facebook and Myspace are the lowest-scoring sites out of 300. In total, the ACSI measures 223 companies. Among them, only 10 score a 65 or below, which puts Facebook and Myspace in the bottom 5% of all measured privatesector companies. Social media site 2010 score Aggregate 70 Wikipedia.org 77 YouTube.com 73 All others 72 Facebook.com 64 Myspace.com 63 Sources: American Customer Satisfaction Index (ACSI).

12 Only 4% of individual investors use social media for financial information Sources of financial information National news sources Websites of financial service companies Local news sources Social media None of above 4% 14% 36% 48% 62% 0% 20% 40% 60% 80% Credible sources of information Your broker, advisor, agent or banker Portfolio manager Friends or family News media Corporate communications None CEO or other senior executives 7% 5% 12% 9% 15% 14% 37% 0% 20% 40% Source: Edelman.

13 Percentage of financial professionals with a social media profile is up significantly Facebook LinkedIn YouTube Photo sharing sites Twitter Myspace Blogs Podcast RSS Communities Geolocation applications Social bookmarking sites Content sharing Other 7% 8% 8% 7% 4% 2% 1% 1% 23% 13% 20% 14% 19% 16% 17% 16% 12% 14% 27% 45% 55% 55% % 0% 10% 20% 30% 40% 50% 60% 70% 80% Source: American Century Investments.

14 Financial professionals stick to LinkedIn for business purposes 80% 70% 60% 50% 40% 30% 20% 10% 0% 53% 27% 7% 17% 21% Facebook LinkedIn YouTube Photo share 1% Business Personal Both 18% 17% 12% 2% 2% 12% 4% 2% 5% 3% 6% 5% 5% 4% Twitter Myspace Blogs RSS Source: American Century Investments.

15 More financial professionals see potential of social media than 2010 study Social media has value for my business 26% 41% 2011 study 2010 study Social media is already producing tangible results for my business 14% 17% Social media is with significant potential for business 44% 56% Social media is a fad with little value for businesses 15% 22% Sources: American Century Investments. 0% 10% 20% 30% 40% 50% 60% Percentage of all respondents

16 Asset manager participation in social media gains significant support, survey says The firms are smart to explore social media 41% 57% The firms are not seeing the value of social media 41% 40% Social media is a wise use of time and resources 21% 31% 2011 study The leading firms are using social media to their advantage 11% 24% 2010 study Sources: American Century Investments. 0% 10% 20% 30% 40% 50% 60% Percentage of all respondents

17 Regulation & compliance are main challenges financial firms face in their social media efforts Regulatory constraints Other competing priorities Compliance Lack of resources Lack of clear return on investment Lack of clear guidelines for regulators Low adoption by customers Lack of important skills in the organization Confusion about how to develop strategy Our IT department blocks us from social All other responses Sources: American Century Investments Significant extent of the issues

18 Twitter mood predicts the stock market Methodology Public mood Sources: Johan Bollen: Twitter mood predicts the stock market.

19 Linear model : The 3 days lag calm mood has the highest predictive value to the DJIA today Sources: Johan Bollen: Twitter mood predicts the stock market.

20 Non-linear model: The calm mood has the highest direction accuracy, and lowest forecasting error when combined with the happy mood NON-LINEAR MODEL: I 1 : Calm I 2 : Alert I 3 : Sure I 4 : Vital I 5 : Kind I 6 : Happy Sources: Johan Bollen: Twitter mood predicts the stock market.

21 Blog and Twitter sentiments predict individual stock price pattern: Google Sources: Devendra Tayal: Comparative Analysis of the Impact of Blogging and Micro-blogging on Market Performance (2009).

22 Blog and Twitter sentiments predict individual stock price pattern: Microsoft Sources: Devendra Tayal: Comparative Analysis of the Impact of Blogging and Micro-blogging on Market Performance (2009).

23 Number of Facebook fans as stock forecaster Sources: Pace University and Famecount.