The Wisdom of Crowds and Stock Price Prediction(مقاله علمی وزارت علوم)
حوزههای تخصصی:
Technical and fundamental analysis are the two principal methods for studying financial markets. However, access to internet and social media helps investors make better decisions. Social media has turned into a source of information for investors. Surowiecki (2005) found social media can predict better than individuals, known as the Wisdom of the Crowd. In this study, we tried to evaluate the wisdom of the crowd’s potential to improve stock price prediction accuracy. So, we developed a prediction model by Long Short-Term Memory based on the wisdom of the crowd. Persian users' opinions on Tehran Stock Exchange stocks were gathered for 8 months and classified as buying, sell, or neutral. During the research period, people mentioned 823 stocks and 52 stocks, which had over 100 recommendations, were chosen. Prediction model accuracy was increased for 19 stocks. While, for 33 stocks were not more accurate with the wisdom of the crowds and social media features. It is important to note that investors apply critical thinking. The wisdom of the crowd can be one input to the decision-making process, along with other related factors. The wisdom of the crowd provides an opportunity to access vast and diverse information. Getting opinions from various people can provide valuable insights into economics and investment preferences. The wisdom of the crowd can help reveal the flow of money. The combination of the wisdom of the crowd, fundamental, and technical analysis can be a useful tool for traders in detecting capital flow and profitable opportunities.