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Investor sentiment and stock returns: Wisdom of crowds or power of words? Evidence from Seeking Alpha and Wall Street Journal

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  • Lachana, Ioanna
  • Schröder, David

Abstract

In light of changes in the media landscape from traditional print towards social media, in this study we compare the ability of investor sentiment measures obtained from various media sources to predict short-term market returns. We show that investor sentiment extracted from the social media platform Seeking Alpha is better in predicting market returns than investor sentiment obtained from the Wall Street Journal, a traditional print medium. Seeking Alpha is more suitable for the extraction of investor sentiment due to the richer language and timeliness of online media.

Suggested Citation

  • Lachana, Ioanna & Schröder, David, 2025. "Investor sentiment and stock returns: Wisdom of crowds or power of words? Evidence from Seeking Alpha and Wall Street Journal," Journal of Financial Markets, Elsevier, vol. 74(C).
    • Handle: RePEc:eee:finmar:v:74:y:2025:i:c:s1386418125000102
    DOI: 10.1016/j.finmar.2025.100970
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    3. Samuel Kaplan & Efstathios Polyzos & David Tercero-Lucas, 2025. "Crypto Listens: Asymmetric Reactions to Text-based Signals in Central Bank Communications," Working Papers 365, Red Nacional de Investigadores en Economía (RedNIE).

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    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets

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