ECB economists turn to Reddit and AI to read investors' mood
· CNA · JoinRead a summary of this article on FAST.
Get bite-sized news via a new
cards interface. Give it a try.
Click here to return to FAST Tap here to return to FAST
FAST
FRANKFURT, Nov 12 : Chatter on the online discussion site Reddit can tell policymakers how retail investors are feeling sooner than traditional surveys, particularly when markets are under stress, two European Central Bank economists concluded.
Feeding over nine million posts on Reddit through the artificial intelligence chatbot ChatGPT-5.1, the researchers say they can detect retail investor mood shifts in a way that aligns with more established sentiment indicators, except their signals are timelier and more frequent.
Combing through posts on various Reddit forums, including r/wallstreetbets, r/stocks, r/StockMarket, r/investing, r/Bitcoin and r/Economics, the economists created an index called the Reddit Retail Investor Sentiment Indicator (R-RISI), which indicates that online discussion may reflect actual retail trading, they said.
"The R-RISI is timelier on short-term market dynamics and offers higher frequency information than survey-based indicators," they said in a blog post published by the ECB on Thursday.
CNA Games
Guess Word
Crack the word, one row at a time
Buzzword
Create words using the given letters
Mini Sudoku
Tiny puzzle, mighty brain teaser
Mini Crossword
Small grid, big challenge
Word Search
Spot as many words as you can
Show More
Show Less
"Changes in the R-RISI are also associated with next-day market returns, particularly during market downturns," the authors, Fabian Wagner and Julian Metzler, said.
The index closely reflects major market developments and contains signals that can help predict short-term price moves, although these appear to matter more when markets are in decline, they said.
Newsletter
Week in Review
Subscribe to our Chief Editor’s Week in Review
Our chief editor shares analysis and picks of the week's biggest news every Saturday.
Sign up for our newsletters
Get our pick of top stories and thought-provoking articles in your inbox
Get the CNA app
Stay updated with notifications for breaking news and our best stories
Get WhatsApp alerts
Join our channel for the top reads for the day on your preferred chat app