Barstool Sports founder Dave Portnoy just released a video backing a new ETF designed to track Reddit-driven social-media buzz

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  • A new ETF designed to track social-media sentiment on platforms like Reddit and Twitter is launching on the New York Stock Exchange on Thursday under the ticker “BUZZ.”
  • Barstool Sports founder Dave Portnoy posted a video on Twitter promoting the ETF on Tuesday.
  • “There is a new ETF launching that I’m a part of, that I’m putting my reputation behind,” Portnoy said in the video.
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In a video posted to Twitter on Tuesday, Barstool Sports founder Dave Portnoy promoted a new exchange-traded-fund that is set to launch on the New York Stock Exchange this Thursday.

The VanEck Vectors Social Sentiment ETF tracks social media sentiment on various platforms like Reddit, StockTwits, and Twitter to fuel its holdings. The ETF will trade under the ticker symbol “BUZZ.”

“There is a new ETF launching that I’m a part of, that I’m putting my reputation behind,” Portnoy explained in the video. Portnoy added that he was “approached by these guys who built an algorithm” that “lingered” and “did its thing” for a number of years.

That algorithm is the BUZZ NextGen AI US Sentiment Leaders Index developed by Periscope Capital in 2015.

But after COVID-19, “the amount of chatter on the internet about stocks exploded,” Portnoy said, adding that he was approached after Penn National Gaming, a casino company that Portnoy partnered with to launch its online sports betting app, “showed up in their ranking.”  

The ETF utilizes alternative data about stocks scraped from social media posts, news articles, and blog posts that are then filtered through an analytical system that helps determines whether the sentiment in either positive or negative. From their, the top ranked 75 US stocks with a market capitalization of more than $5 billion are included in the ETF, which is rebalanced monthly.

“BUZZ empowers individual investors to potentially benefit from the predictive insights gained by measuring the collective convictions about stocks, ultimately building the benchmark for social sentiment,” VanEck managing director Ed Lopez said in a press release. 

In an emailed statement to Insider, VanEck added: “David Portnoy is a shareholder of BUZZ Holdings, ULC, the parent company of the BUZZ NextGen AI US Sentiment Leaders Index. He represents the Index and has no affiliation with VanEck. He does not provide investment advice on behalf of VanEck. There is no affiliation with VanEck and Barstool Sports.”

From criticizing Warren Buffett’s decision to sell airline stocks amid the pandemic, to his recent interview with Robinhood CEO Vlad Tenev, Portnoy continues to make waves in the investment world as he periodically broadcasts to his millions of followers the moves he is making in the stock market. 

A similar social media insight ETF from Sprott Asset Management that was based on a different social media sentiment index launched in 2016, but closed three years later after failing to attract enough assets.

The environment for a social media ETF may be better today than it was then, after millions of new investors flooded the stock market amid the COVID-19 pandemic, and following the outsized influence of forums like Reddit’s WallStreetBets, which helped sparked an epic short-squeeze in shares of GameStop earlier this year. 

Read more: GOLDMAN SACHS: These 40 heavily shorted stocks could be the next GameStop if retail traders target them – and the group has already nearly doubled over the past 3 months

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Stocks could stumble in early 2021 as investor sentiment surges past market fundamentals, Goldman Sachs says

NYSE Trader
Traders look on after trading was halted on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 18, 2020

  • Goldman Sachs’ Sentiment Indicator – which measures how far stock prices are outpacing fundamentals – climbed to two standard deviations above its average on Friday, signaling heightened risk of near-term market weakness.
  • Rising COVID-19 hospitalizations and weak economic data add to the odds of “a modest positioning driven pullback in the next month,” strategists led by Arjun Menon said in a note.
  • The bank still stuck with its forecast that the S&P 500 will rise 16% throughout 2021, hinging the forecast on expectations of widespread vaccine distribution.
  • Such stretched positioning historically led to market weakness over the next one to four weeks, Goldman said. Still, stock returns typically turned positive after two months, the team added.
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Unusually optimistic investor sentiment endangers the stock market’s near-record levels heading into the new year, Goldman Sachs strategists said Monday.

Positioning in stocks is at “extremely stretched” levels as prices rally further beyond equities’ fundamentals, the team led by Arjun Menon said in a note to clients. The bank’s Sentiment Indicator – which tracks stock positioning among retail, institutional, and foreign investors – landed two standard deviations above average on Friday, representing a 98th percentile reading since 2009. The gauge last hit that level in September 2019, months before the coronavirus ended the US’s longest bull market in history.

Readings above one standard deviation “historically signaled stretched equity positioning,” the team said. Such positioning tends to present a headwind to short-term returns when economic growth is slowing or stable, they added.

“The recent surge in COVID hospitalizations and weaker-than-expected economic data therefore increase the risk of a modest positioning-driven pullback in the next month,” the Goldman strategists said.

Read more: Morgan Stanley’s consumer analysts share 13 high-conviction global stocks to buy to capitalize on the continuing economic recovery

Stocks are trading just off of record highs, most recently falling on concerns of a delayed stimulus package. Enthusiasm around President-elect Joe Biden’s victory and progress toward approving a coronavirus vaccine boosted outlooks on Wall Street through November and fueled a shift in investor capital from growth stocks to riskier value names.

The team still holds a largely bullish outlook toward 2021 market returns despite near-term risks. The bank doubled down on its call for the S&P 500 to hit 4,300 by the end of 2021, implying a 16.3% rally from current levels. Widespread vaccine distribution throughout next year will drive a V-shaped recovery, and any risks from stretched positioning will fade in a few months, the team said.

In prior instances when Goldman’s Sentiment Indicator landed two standard deviations above average, S&P 500 returns were weak in the next one to four weeks but almost always positive after two months, the bank added.

Even with equity allocations at their currently heightened levels, the strategists expect investors to continue pushing cash from money-market funds into the stock market. Cash yields are set to hold near zero for several years, and hopes for economic recovery will set stocks on an upward trajectory, the bank said.

Households and foreign investors are expected to be net buyers of US stocks throughout next year, with the former group poised to push $100 billion into the market. Mutual and pension funds will be net sellers, Goldman said.

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Read the original article on Business Insider