A couple of days ago Reuters made an announcement that appears to have been ignored by the PR industry. Essentially they announced the introduction of technology that would scan news for sentiment on particular companies and issues. If, as a result of these news scans, sentiment went above or below user defined limits, then an automatic trade would be executed. It's another form of algorithmic trading and will likely become a key target for PR consultants wanting to drive the price of a stock up or down. Presumably, if you know how to play the sentiment game, you will in effect be able to force your client's share price up and its competitor's down. A pretty scary thought but just as there are companies that have built a business optimizing sites for search engines, I suspect there will be people optimizing content for this Reuters technology.
http://about.reuters.com/productinfo/updates/update.aspx?user=1&id=1176&
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3 comments:
To be fair, Reuters offers the feed as a service and no automated trade abilities. As a subscriber one could theoretically design or build into their algo's automated triggers based on sentiment but that reality is unlikely.
Being objective, I think the service MIGHT entice some shops to alter urgency of a particular name within a strategy, but to outright trade based on computer inferred 'sentiment' is lunacy. If you truly believe that I'm guessing you spend a good portion of time in the astrology section of the newspaper.
i guess a lot depends on the limits you set. I'd agree that most people wouldn't let algorithms like this drive most trades but then i remember meeting dealers in london when Reuters ART terminal was a new thing and at that time they said people will set wide limits. Ten years later automatic trades based on price changes are prety standard practice...
Tim, you raise the right question and with it, you are also pointing to the answer. Yes, people will optimize for it and Reuters needs to take that into account. Reuters mustn't let itself become a distribution platform for optimized content--it would be irresponsible because of its reach.
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