Closingbell Crowdsourced Stock Ratings
12 Pages Posted: 27 Dec 2017 Last revised: 8 May 2018
Date Written: April 30, 2018
ClosingBell is an app-based collaborative stock trading platform which allows its users to connect their online brokerage accounts and share their trades and portfolios with one another. Users, who are retail traders, can also share their trade ideas, or ratings, with the ClosingBell community.
The ClosingBell crowdsourced stock ratings dataset includes all such Buy and Sell ratings issued by the community’s members since 2014, currently over 47,000 ratings from 2,800 contributors. In this paper we examine the predictive power of the ClosingBell ratings, and find that the ratings are predictive of stock prices over a one to twenty trading day period. The returns of portfolios built using the ratings exhibit dollar neutral returns of 12% with a Sharpe ratio of 1.0. These returns are robust to trading costs and are not explained by common risk factors. The ClosingBell data represents a unique and powerful source of crowdsourced alpha which can improve systematic sentiment strategies.
Keywords: crowdsourcing, forecasts, recommendations
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