Twitter-based hedge fund beats stock market

August 18, 2011 10:38:45 AM PDT
A new analysis suggests a surprising way to beat the market -- using of all things, Twitter.

A United Kingdom-based hedge fund called Derwent Capital has been making investments the past month using the mood on Twitter. The fund has a formula which counts emotional words like alert, happy and vital. Together they reflect how calm public sentiment is and that's used to predict daily moves on the Dow.

The fund's accuracy is nearly 88 percent -- beating other hedge funds and the overall market.