ECB economists turn to Reddit and AI to read investors' mood

FRANKFURT, Nov 12 : Chatter on the online discussion site Reddit can tell policymakers how retail investors are feeling sooner than traditional surveys, particularly when markets are under stress, two European Central Bank economists concluded.

Feeding over nine million posts on Reddit through the artificial intelligence chatbot ChatGPT-5.1, the researchers say they can detect retail investor mood shifts in a way that aligns with more established sentiment indicators, except their signals are timelier and more frequent.

Combing through posts on various Reddit forums, including r/wallstreetbets, r/stocks, r/StockMarket, r/investing, r/Bitcoin and r/Economics, the economists created an index called the Reddit Retail Investor Sentiment Indicator (R-RISI), which indicates that online discussion may reflect actual retail trading, they said.

"The R-RISI is timelier on short-term market dynamics and offers higher frequency information than survey-based indicators," they said in a blog post published by the ECB on Thursday. 

"Changes in the R-RISI are also associated with next-day market returns, particularly during market downturns," the authors, Fabian Wagner and Julian Metzler, said.

The index closely reflects major market developments and contains signals that can help predict short-term price moves, although these appear to matter more when markets are in decline, they said.