Tapping the collective wisdom of the crowd

Can investment managers benefit from the information provided by online communities and crowdsourcing platforms that focus on investing and trading-related discussions? As investment managers increase their use of these alternative data sources, they are looking to the wisdom of the crowd for potential alpha advantage. We refer to this process of generating market insights from online communities and crowdsourcing platforms as collective intelligence investing.

Two key phenomena—content-creation web 2.0 technologies and advanced computing power—appear to be the key enablers behind the collective investment movement. Web 2.0 has enabled online users to generate and share content on a diverse array of platforms. And the rise of advanced computing and analytics capabilities have allowed investment managers and information support vendors to generate real-time market insights from vast quantities of data.