The Buzz of a Stock Market Crash

(All graphs as of noon GMT January 22nd 2008)

The stock markets took a tumble yesterday (21st of January) but looking at the online buzz it didn’t really come as a surprise.

Figure 1 (below) shows the number of different mentions of FTSE in the last 30 days as well as the aggregated sentiment.

Notice how the sentiment drops sharply on the 14th – a week prior to the big share price crash yesterday.

Figure 2 (below) shows the relative Share-of-Influence of certain words used in the context of FTSE.

(Share-of-Influence is calculated by calculating the relative frequency of each word, but adjusting for the measured topical influence of the stakeholder ‘speaking’. Example: When the debate is about ‘FTSE’, anything published by Guardian weighs approximately 3 times anything published by Daily Mail.)

Notice how ‘Recession’ and ‘Crash’ have increased their presence in the debate in January.

Figure 3 (below) shows the sentiment of the context that these words appeared in over the last 30 days.

Notice that in general, ‘Recession’ has recently appeared in a more negative context than the other words – even ‘Crash’.