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GIFfluence: A Visual Approach to Investor Sentiment and the Stock Market

Author

Listed:
  • Gu, Ming
  • Hirshleifer, David
  • Teoh, Siew Hong
  • Wu, Shijia

Abstract

We study dynamic visual representations as a proxy for investor sentiment about the stock market. Our sentiment index, GIFsentiment, is constructed from millions of posts in the Graphics Interchange Format (GIF) on a leading investment social media platform. GIFsentiment correlates with seasonal mood variations and the severity of COVID lockdowns. It is positively associated with contemporaneous market returns and negatively predicts returns for up to four weeks, even after controlling for other sentiment and attention measures. These effects are stronger among portfolios that are more susceptible to mispricing. GIFsentiment positively predicts trading volume, market volatility, and flows toward equity funds and away from debt funds. Our evidence suggests that GIFsentiment is a proxy for misperceptions that are later corrected.

Suggested Citation

  • Gu, Ming & Hirshleifer, David & Teoh, Siew Hong & Wu, Shijia, 2025. "GIFfluence: A Visual Approach to Investor Sentiment and the Stock Market," MPRA Paper 127438, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:127438
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    References listed on IDEAS

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    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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