Price Bumps: Tactics for Stocks that can be Used for Cryptos
A new study conducted by two researchers, J. Liaukonyt ̇e and A. Zaldokas, suggests that TV ads can influence investor behavior in real time, leading to a slight boost in trading activity in the advertiser’s stock.
Key takeaway:
“In the 15 minutes after a commercial has aired, the study shows, a number of investors seek out financial information about the advertiser, leading, on average, to a 3% increase in queries to the Securities and Exchange Commission’s Edgar database of company filings and an 8% uptick in Google searches.” [Link]
The researchers further stated in an interview with Bloomberg, “Indeed, our recent research shows that the effects of advertising on investor behavior and stock prices are more far reaching than previously believed.” [Link]
“We found that each dollar spent on advertising translated to roughly 40 cents of additional trading volume in the advertiser’s stock. The effects were most pronounced for trades initiated by retail investors. Overnight stock returns were positive — though they partially reversed during subsequent trading days.” [Link]
In the beginnings it was assumed that conscious attention is necessary for advertising to anchor marketing messages in the brain. Those findings however disprove traditional stock market theories, which rely on the assumption that stock traders make decisions in a completely rational and objective manner, while taking time to synthesize all available information. Various studies conducted by other research groups observed a similar, so called, “primer effect”. [Link]
Let’s turn to Neuroscience for a minute and take a look at how our psyche works.
Pilot & Autopilot — structure of the human psyche
We know today that the human psyche operates on two systems, or better, in two modes:
- Pilot (consciousness) = responsible for all deliberate processes, such as deliberate thinking, conscious image recognition, controlled behavior, planning processes and logic. With about 40 sensations (bits) per second it’s very slow in processing information.
- Autopilot (unconsciousness)= subconscious processes, such as sensory perception, many learning processes, all unconscious emotions, memory, rules of thumb, stereotypes and unconscious images. Those processes are fully automated and continuous. It is highly efficient with 11 million sensations per second — basically a super-computer — , responding to symbols (codes), is intuitive, spontaneous, reacts immediately and regulates the entire nonverbal communication. [Link]
Those two constructs are the psychological foundation and are the basic drivers that determine the buying and decision-making behavior. Both components have an immediate effect on behavior and cannot be separated. Our attitudes are the results of intertwined interaction between those two systems working in tandem. [Link]
Numerous studies have demonstrated that subliminal stimulation involving concepts have measurable consequences on behavior. Our unconscious paves the way for our actions. As we can see on the results of the study, it is evident that the previously aired ad (subliminal stimuli) triggered certain associations creating an effect on investors stock buying behavior. Based on these findings we can conclude that even our most reasonable thoughts and actions mainly result from automatic, unconscious processes. [Link]
Liaukonyt ̇e and Zaldokas specifically investigated how the effect varies with an advertised brand name similarity to their parent company’s name (e.g.,Wendy’s (brand) and The Wendy’s Co(parent company) versus Taco Bell(brand) and Yum! Brands Inc(parent company). [Link]
The results:
“Products with names that matched or shared similarities with the name of the company itself spurred greater reaction.” [Link]
The experiment demonstrates that unconsciously noticed ads, even without an explicit reminder, have a significant influence on investor’s choice of a stock.
How can cryptos benefit?
The crypto markets can capitalize on the trials and errors along with refined ways of attracting investors that have proven to work in the traditional stock markets. This means that imitating some of the best-of-breed practices when it comes to organic adoption, liquidity and price appreciation. These only occur when there is execution on:
- Product market fit
- Market size
- Revenue
- Profit
Here are a few good examples of crypto companies that make the mark on all four points above:
Vectorspace AI (VXV) is a company imitating this best of breed approach when it comes to awareness within the crypto sphere. You know you’re on the right track when you’re technology is featured in HBO’s show Billions in season 5 episode 6.
Vectorspace AI, an on-demand NLP/NLU correlation matrix datasets provider has successfully adopted those takeaways and implemented them in their awareness campaign by collaborating with multi-billion dollar companies. They build datasets which enable hidden relationship extraction and evidence networks for Life Sciences/Pharma (COVID-19) and the financial markets. Their approach is strategic, driven by top-notch partnerships. Vectorspace AI is focused on quality rather then quantity. They partnerships include:
Elastic NV [ESTC] — a $6bn public enterprise open source software and
search co, used by most and known by all in the software industry. Elastic contacted Vectorspace AI after reading an article on how they are providing investors an opportunity for unique, powerful and profitable information arbitrage to improve their portfolios.
“We are happy to be working with Vectorspace AI based on their most recent collaboration with us based on the article we published titled ‘Generating and visualizing alpha with Vectorspace AI datasets and Canvas’. They represent the tip of the spear when it comes to advances in machine learning and artificial intelligence. Our customers and partners will certainly benefit from our continued joint development efforts in ML and AI,” Shaun McGough, Product Engineering, Elastic.
Press release:
“Vectorspace AI Datasets are Now Available to Power Machine Learning (ML) and Artificial Intelligence (AI) Systems in Collaboration with Elastic” [Link]
Amazon Web Services [AMZN] — wanted to partner with Vectorspace AI
right after they heard what they do — especially in regards of COVID-19. Vectorspace AI delivered a datasets related to publicly traded pharma companies correlated by drug compounds.
Microsoft [MSFT] — Azure Open Datasets are curated public datasets that
you can use to add scenario-specific features to machine learning solutions for more accurate models. Vectospace AI will be offering their datasets through the Azure Open Datasets platform.
Press release:
“COVID-19 Drug Repurposing Datasets Now Available in Collaboration with Vectorspace AI, Amazon & Microsoft” [Link]
Note: MSFT, AMZN and GOOG are all in a heavy competition in offering datasets because they power AI/ML systems, and with GOOG taking the lead so far.
CERN — European Organization for Nuclear Research, is one of the world’s
largest and most respected centres for scientific research. Vectorspace AI is collaborating on research on unsupervised learning algorithms to analyze data from the Large Hadron Collider (LHC). This is new territory. And there is much data that comes from the collider, that it is difficult for humans to understand it. It is very likely that there are patterns in the data that humans have not been able to recognize. There is a good possibility for new discoveries that may advance our understanding of physics as a whole.
And here comes the cherry on top:
Vectorspace AI recently launched a COVID-19 dataset builder [Link] enabling any researcher, scientist or other individual to build their own customized dataset related to COVID-19. Research groups can, e.g. correlate drug compounds with infectious diseases in the context of COVID-19 (“context controlled”) allowing them to view the vector of one drug and find a cluster of similar drugs for possible repurposing or generating a new hypothesis or discovery.
They recently announced on their Telegram channel plans to launch an exclusive investment club offering to their community. This is a perk that can improve anyone’s portfolio during times like these.
By joining the investment club investors get access to Vectorspace AI’s short baskets on events in the traditional markets and long baskets on the crypto side. Those baskets will be generated by Vectorspace AI, based on their algorithms and the signal. The minimum investment amount is $500 to get on the list. When you join an investment club, you can avoid the fees and commissions of investment advisors or stockbrokers. And of course, there’s the potential that the synergy of the investment club can translate into higher returns than you could have achieved on your own. An additional benefit of being a member, next to profit and education, you get to participate in a significant way to contribute to a great cause of fighting COVID-19. As far as I know the team is currently still gathering applications from interested individuals.
With all that in mind, I suggest to keep a close eye on Vectorspace AI. For most accurate VXV price action go to Blockfolio.
Other cryptocurrencies that have been operating successfully based on strong partnerships are Cindicator, Ripple, IOTA, Stellar, Cardano, VeChain, Tezos, Fetch.ai as well as Chainlink.
(Crypto profile credit: Coingecko)
Cindicator enables the forecasting of crypto prices and traditional assets. Track your performance to improve your analytical skills. They also offer monthly trading competitions in partnership with large and small companies.
Ripple Labs has announced a number of partnerships with leading money transfer services such as MoneyGram, with more financial market partnerships expected in the future.
IOTA has formed partnerships with industry giants such as Land Rover and Jaguar, Sønstebø.
Stellar collaborated with IT giant IBM, which resulted in the Stellar-based World Wire payment system.
Cardano has been collaborating with high-profile companies such as IBM Research, PwC (Source) and New Balance, just to mention a few.
VeChain has been strong partnerships with DNV GL, PwC, Walmart, BMW and many others.
Tezos and Chainlink are following each other closely as their partnership solidifies, providing opportunities for shrewd traders. Other partners are Tribe (Singapore Government), Globacap and many more.
Fetch.AI is at the forefront of accelerating research and deployment of emerging technologies, including blockchain and AI. Its solutions are designed for people, organizations, and IoT. The project has created an Open Economic Framework (OEF) that serves as a decentralized search and a value exchange platform for various autonomous economic agents. This is supported by a smart ledger that can support more than 30,000 transactions per second, and which is ready to meet the demands of the next generation of connected devices.
Chainlink’s partnerships are made up of companies such as Google Cloud, Credits, Oracle, V Systems, DApps Inc and the list goes on.
Conclusion
As usual, be sure to do your due diligence (DD). If you need any pointers on good DD practice and procedure this document titled “Structured Cryptoasset Due Diligence (DD) Services” might help. Happy trading!
