We the Sheeple: Can A Financial Market "Expert" TRUMP the Stock Market?

Open Access
Author:
Cather, Will D
Area of Honors:
Accounting
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
  • Brian Spangler Davis, Thesis Supervisor
  • Orie Edwin Barron, Honors Advisor
Keywords:
  • Donald Trump
  • Trump
  • Twitter
  • social media
  • stock market
  • S&P 500
Abstract:
This thesis investigates whether “Experts” can move the stock market over the short term or the long term through their cult following and unique information spreading techniques. The specific “Expert” of study for this thesis is current U.S. President Donald Trump, specifically through his usage of Twitter. A comparison will be made of stock price movements of companies Trump has tweeted about since he was victorious in the 2016 Presidential Election on November 8th, 2016, as compared to the actual daily or weekly stock market returns as a whole. The standard of comparison used to analyze whether or not Trump is moving the stock market will be the S&P 500. Comparing company price movements after Trump has tweeted about them to the S&P 500 performance will help to analyze whether Trump’s tweets have a profound effect on the valuation of the companies he complements/critiques or if these firms’ share prices are simply moving with the market. To test these research questions, data will be collected over a series of Trump tweets from November 8th, 2016 to November 16th, 2018. A price comparison will be made one day and one week after the tweet was made. Overall, it was found that Trump did influence the companies he made a negative tweet about in the one-day return following the tweet. However, this effect of negative tweets was very short term and did not differ significantly from the S&P 500 over the longer term, as the one-week later results illustrate. There was no statistically significant evidence to suggest that Trump moved the market in the daily or weekly returns for companies he complemented on Twitter. These results suggest that Trump may be influencing a large portion of the market that is trading on noise (especially negative tweets) more than anything else and his opinions do not have a strong impact on the markets outside of a very short term timeframe.