Reading the room: what Reddit tells us about retail investor sentiment

ECB blog post by Fabian Wagner and Julian Metzler presenting the R-RISI, an AI-built indicator of retail investor sentiment based on Reddit discussions (r/wallstreetbets, r/stocks, r/investing, r/Bitcoin, r/Economics, among others). A language model classifies each post by tone, topic and asset, and the resulting index is timelier and higher-frequency than survey-based indicators. Its changes are associated with next-day stock market returns, especially during market downturns.

Key points

• Each post is classified as positive, negative or neutral and by topic: equities, funds, macroeconomics, options, commodities, geopolitics, tariffs or crypto-assets
• Macroeconomic topics dragged the indicator down during the COVID-19 shock and tariffs did so during the April 2025 turmoil; in calmer periods it is driven by equities and options
• Russia's invasion of Ukraine immediately hit geopolitical sentiment, while macroeconomic sentiment worsened later as the effects on energy and inflation emerged; with the US reciprocal tariffs the opposite happened
• Thematic sub-indices: the AI one (the 'Magnificent Seven') moves in line with those stocks but is more volatile; the Bitcoin one diverges from the price more often
• It comes with a working paper (No 3276, August 2026) and an interactive online dashboard

Who is affected

Central banks and financial stability supervisors, market analysts and asset managers tracking the behaviour of retail investors and crypto-assets.

Plain-language version

Summary produced with artificial intelligence from the official publication. It may contain errors: always check the original document.