TY - JOUR
T1 - Mood and the Market
T2 - Can Press Reports of Investors' Mood Predict Stock Prices?
AU - Cohen-Charash, Yochi
AU - Scherbaum, Charles A.
AU - Kammeyer-Mueller, John D.
AU - Staw, Barry M.
PY - 2013/8/28
Y1 - 2013/8/28
N2 - We examined whether press reports on the collective mood of investors can predict changes in stock prices. We collected data on the use of emotion words in newspaper reports on traders' affect, coded these emotion words according to their location on an affective circumplex in terms of pleasantness and activation level, and created indices of collective mood for each trading day. Then, by using time series analyses, we examined whether these mood indices, depicting investors' emotion on a given trading day, could predict the next day's opening price of the stock market. The strongest findings showed that activated pleasant mood predicted increases in NASDAQ prices, while activated unpleasant mood predicted decreases in NASDAQ prices. We conclude that both valence and activation levels of collective mood are important in predicting trend continuation in stock prices.
AB - We examined whether press reports on the collective mood of investors can predict changes in stock prices. We collected data on the use of emotion words in newspaper reports on traders' affect, coded these emotion words according to their location on an affective circumplex in terms of pleasantness and activation level, and created indices of collective mood for each trading day. Then, by using time series analyses, we examined whether these mood indices, depicting investors' emotion on a given trading day, could predict the next day's opening price of the stock market. The strongest findings showed that activated pleasant mood predicted increases in NASDAQ prices, while activated unpleasant mood predicted decreases in NASDAQ prices. We conclude that both valence and activation levels of collective mood are important in predicting trend continuation in stock prices.
UR - http://www.scopus.com/inward/record.url?scp=84883195557&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84883195557&partnerID=8YFLogxK
U2 - 10.1371/journal.pone.0072031
DO - 10.1371/journal.pone.0072031
M3 - Article
C2 - 24015202
AN - SCOPUS:84883195557
SN - 1932-6203
VL - 8
JO - PloS one
JF - PloS one
IS - 8
M1 - e72031
ER -