My Strategy for the Rumor Mill

Happy Halloween!

And what a blood-pumping month it’s been! The markets have been all over the place. If your emotions didn’t run wild with them, a Zombie costume may be an appropriate choice for today.

Personally, I had to take a couple of steps back to figure out all the hype cycles. Today, I am going to share some information with you about how to profit when everybody else’s head is spinning.

I’m sure you’ve heard the old Wall Street adage, “Buy the rumor, sell the news” — and maybe you were even left holding the bag on an execution strategy. Well, we now have a leg-up in this fight, because the rumor mill has now been digitized through social media, blogs and chat — and that’s exactly what we monitor.

In fact, I utilized my Department of Defense and systems engineering background to create a system that finds rumors that are “needles in the haystack of messages” to gain a market advantage. A lot of tracking and testing has proven that this is a system that works.

When I applied this system to Ebola plays in the biotech corner stock market, some serious patterns emerged. The largest pattern was the message chatter volume increasing on numerous Ebola-related stocks — just before the share price jumped. I call this the ground-swell effect and I’ve utilized many times to identify potential rising stars before the mainstream media and most other traders can identify them.

This is one way to make substantial gains. We can also profit on the other side of a trade, because our system also picks up a decline in message-chatter, signaling an “end-of-hype” downturn. This is exactly what happened with many Ebola-related stocks and we’ve already been handed a tidy gain. At last glance, our previous trade was up more than 25%. If you’d like to see more about that, you can read about it here.

Stay tuned for the next big hype cycle.

Happy Hunting,

Ben_signature

 

 

 

 

Ben

Categories: Investing

About Author

Ben Benoy is a veteran of the U.S. Marine Corps and has been an active retail trader since 2006. He identifies investment opportunities based on key social media trends. He first identified the concept in 2008 and has since developed a tool for tracking investment “chatter” between social media users. His proprietary Social Media Stock Sentiment system has developed into a state-of-the-art platform that identifies and classifies chatter about stocks through algorithms and other indicators to forecast stock-price direction. Ben’s track record speaks for itself — over the past 12 months, his system boasts a win rate of 82.2% on 112 stock trades.