With Donald Trump now officially installed as President of the United States, the relevance of his words skyrocket even more than when he was first elected to the office in November. In the 73 days in between that win and his inauguration, Trump hasn’t been shy about calling out specific industries or individual companies about any number of perceived missteps.
Due to such direct attacks, the words have been immediately felt in financial markets, causing the market value of those industries and corporations to drop. In most cases, that effect has been a temporary one but it’s had enough impact that a wide array of hedge funds and traders have taken steps to create an algorithm that can immediately connect a Trump comment with a particular company.
The fact that Trump has continued to use Twitter to disseminate such remarks is one of the prime reasons for such strategy. While tradition would dictate that the rigors of his new office should prevent him from using social media as a key facet of his communication strategy, nothing about Trump has been traditional.
Since the stock market is often a breeding ground for rumors that might affect a stock, the possibility exists that mistakes in crafting that algorithm can lead to steep losses. Yet due to the quick returns to normalcy that have been evident, such mistakes might be avoided by companies simply waiting to purchase such stocks at their low point.
The reliability of connecting Trump and algorithms gained credence after his stunning victory. It was because a political science professor at Stony Brook University predicted last February that Trump would almost certainly win the presidency, a prediction that was dismissed. Less than two weeks before the election, a different artificial intelligence system reinforced that belief with little fanfare.