Tuesday, April 04, 2006

Consumer and Investor Sentiment

A great deal of research goes into analyzing consumer and investor sentiment for economic and financial forecasting. The best free resource with regards to such sentiment - in my opinion - is the University of Michigan's Survey of Consumers, a monthly survey that outlines how consumers feel about products, the economy, their finances, and other details. Really interesting to follow this around, though non-paying subscribers have to wait a few months for results.

I stumbled upon this while working on my neural networks project, and have been incorporating it into my research. As I've been doing this, however, an idea popped into my head. Google News scans articles for various details and groups them -- why not do the same with articles targeting the economy or specific companies, and trying to group them based on the number of positive (or negative words) they use? This could potentially lead to a daily sentiment index for stocks, and may prove to be a very reliable indicator of how a stock will do in the future.

If I get time in the summer, I'll play around with these ideas. I'm fully comfortable with neural networks now, so expect their use in more of the projects on I2R and other things I'm involved in. The report on the neural networks project should be put online in about a week or two.


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