A common piece of kindergarten (and career) advice is to “stand out from the crowd,” but on occasion it pays to follow everyone else.
According to a release from CrowdInvest, the app’s crowdsourced sentiment index actually outperformed the S&P 500 by 1.47 percentage points in 2015.
As Josh Brown at The Reformed Broker put it, the index is sort like “Tinder for stocks.”
According to CrowdInvest’s website, the Wisdom Index is formed by users’ opinions of stocks that have an average daily trading volume over $15 million.
Users can say in the app whether they are long (thinking the stock will go up) or short (thinking the stock will go down). The index then averages the two and finds the top 35 stocks by percentage of long votes and weights the index accordingly.
The company used the opportunity to tout the app.
“This outperformance demonstrates how the index, designed to harness wisdom of the crowd by using data from the CrowdInvest app, continues to deliver competitive performance compared to passive benchmarks and actively managed investment strategies,” the company said in a release.
As of November, the most recent data set, the index’s top holdings (4.9% of the holdings each) were MasterCard, VF Corp, General Growth Properties, Walgreens Boots Alliance, Morgan Stanley, and PowerShares Private Equity.
In the release, CrowdInvest CEO Martin Mickus said the performance proved the platform could work.
“The performance of the index over the first year validates the theory that by placing investment decisions squarely in the hands of the crowd, we can construct an intelligent, competitive portfolio that is a compilation of equities with the largest net positive or bullish sentiment,” Mickus said.
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