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August 21, 2006

SocialPicks enables collaborative investment research

Marshall Kirkpatrick

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There’s no shortage of stock market oriented communities coming online, it’s almost hard to tell them apart, but today’s entrant is particularly interesting. SocialPicks is focused on reputation building and small group collaboration. They have just begun to offer limited beta accounts.

Users enter their stock trading activities and thoughts then befriend and rate other users. Reputations are built according to a user’s percentage of winning picks, quality of insights as judged by the community and number of trades made. With commenting, feeds and a list of popular stocks that looks like a tag cloud (just charming really) this site has got most of the requisite features of a standard social network. SocialPicks believes that an emphasis on individual reputation instead of aggregate information will prevent much of the gaming that critics of social stock sites often critique.

Cofounded by Weiting Liu, SocialPicks has been responded to with enthusiasm by alpha testers - but there are many competitors and many questions about this whole class of sites.

I asked the company why successful traders would want to participate, instead of keeping their successful knowledge private. They told me that in addition to small group collaboration, SocialPicks will be a good place for would-be financial advisers to prove themselves in a public and transparent way. They told me that all too many market discussions go on in online forums, where there is no way to discern the veracity of advice.

The company is also of the belief that many people want an easy way to share their knowledge with a small group of their friends in a structured way. They are aiming for a del.icio.us model more than a digg model, they say. That’s the main part of their approach that prevents pump and dump activity, they plan to institute activity monitoring that will notify users of suspicious behavior as well.

See also Feeling Bullish (possibly the most similar to SocialPicks), Bullpoo, Gradr, Stocktickr and Digstock. Some one will come up with the winning formula in this space and SocialPicks does seem to have a well thought out strategy.

  • Sphere It

This entry was posted on Monday, August 21st, 2006 at 9:30 am and is filed under Company & Product Profiles. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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  1. Irregular Payments

    August 21st, 2006 at 12:53 pm

  2. TechCrunch Japanese アーカイブ » SocialPicks、投資リサーチをコラボ化

    August 21st, 2006 at 3:06 pm

  3. Dominic Jones / Investor Relations Blog :: Web 2.0 for investors is alive and kicking :: August :: 2006

    August 21st, 2006 at 9:46 pm

  4. Howard Lindzon » Social Investing - Tech Crunch just barfed out a post

    August 22nd, 2006 at 5:20 am

  5. Abnormal Returns » Tuesday links: quant bandwagon

    August 22nd, 2006 at 9:44 am

  6. links for 2006-08-22-- str1ke.us

    August 22nd, 2006 at 3:36 pm

  7. Rohit Aggarwal » Interesting example of Social Networks- socialPicks

    August 23rd, 2006 at 3:27 pm

  8. mokshore » Blog Archive » links for 2006-08-26

    August 26th, 2006 at 8:18 am

  9. Oliver Thylmann’s Blog » Collaborative Investments

    October 2nd, 2006 at 3:03 pm

  10. SocialPicks Opens To Public

    January 29th, 2007 at 1:59 pm

  11. Multimedias.mobi » SocialPicks Opens To Public

    January 29th, 2007 at 3:06 pm

  12. MarketWatch Adds Community Stock Predictor

    March 26th, 2007 at 7:03 pm

  13. The Virtual Handshake Blog | » Collaborative investing

    August 14th, 2007 at 6:56 pm

Comments

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  1. Bryan

    August 21st, 2006 at 9:56 am

    I hope I get accepted into the beta soon. I like this idea, and since i just started investing.. i have no idea what I am doing, so im learning as I go and this would be a great help.

  2. Alex Moskalyuk

    August 21st, 2006 at 10:08 am

    The idea is pretty good - use collective wisdom to predict the markets that are driven by collective wisdom to begin with. Sort of reminds me of Marketocracy, which requires people to put up real money to play: http://www.marketocracy.com/

  3. Cruncher

    August 21st, 2006 at 10:12 am

    So what is it that SocialPicks has got that the competitors do not have?

  4. hams

    August 21st, 2006 at 10:14 am

    was this setup by LionMaster88? i can only imagine the amount of pump-n-dump scams that will occur… i’m sure kramer will love it though.

  5. Clint Chao

    August 21st, 2006 at 10:19 am

    Marketocracy doesn’t require real money to “play”, as the funds in the community are virtual, but the cool thing is that the collective wisdom gathered from the 50,000 funds in the community is then harnessed into a real fund (with real money), and is available through nearly any brokerage under symbol “MOFQX” (Marketocracy Masters 100 fund).

    We’ve been investors in the company since inception in 2000, and have seen great validation in the wisdom of crowds concept by outperforming the S&P500 by a wide margin.

  6. Josh

    August 21st, 2006 at 10:41 am

    The whole point of these sites is to minimize the ‘pump-n-dump’ scams of the ‘web 1.0′ forums. By making reputation the forefront of our site (http://FeelingBullish.com) we believe we have made pumping or trashing a stock much more difficult, as each individual who participates has an audited reputation in the system. If someone chooses to listen to someone with either no reputation or a poor reputation, then that is a risk they take.

    The hope with these sites, is that it elevates the conversation and analysis, and removes the pump-and-dump type users by making it more difficult for them to participate.

    Josh
    http://FeelingBullish.com

  7. Speculate

    August 21st, 2006 at 10:42 am

    I doubt if this will work.

    1. The sampling errors will lead to ppl make all the wrong calls. We have a blog dedicated to explaining such inference problems, at http://fo.unta.in/numerate/

    2. Clint (comment above), Outperforming the markets is a matter of chance. Fooled by Randomness explains it much better than any other place.

    3. Money in the community is virtual. You still think it can “predict” ?

  8. Alex

    August 21st, 2006 at 11:11 am

    The New York Stock Exchange has been doing the whole “widom of crowds” thing for over 200 years. Why would I place any faith in such a small sample when I can get the opinion of the entire world by looking at a stock price?

  9. Paul Douglas Boyer - MadMoneyMachine.com podcast

    August 21st, 2006 at 11:29 am

    I’ve become a stock-picking apostate. Come to find out, the best way to invest, the way with the greatest return for the least amount of risk, is to own the entire market, US, International, emerging, along with Real Estate Investment Trusts (REITs), all in various sizes: Large, Mid, Small, Micro. Keep it in balance throughout the years, and you will beat all stock pickers, active managers, and Jim Cramer.

    What I would LOVE to see a Web 2.0 site do is to help people develop entire portfolios of fund holdings that maximize their returns while minimizing their risks (as measured by historical standard deviation at least).

    I’ve been running a Portfolio Smackdown between a set of Exchange Traded Funds (Index funds) and some of the top stock picks of Jim Cramer from his Mad Money TV show, and you can see the results at http://MadMoneyMachine.com/portfolios.

    Unfortunately, I’ve checked all of the sites mentioned in this posting, and they are all about picking stocks, not about real investing.

    Keep trying!

    Paul

  10. Jason Fang (SocialPicks)

    August 21st, 2006 at 12:05 pm

    Well, I hesitate to call Socialpicks “wisdom of crowds”…one of the main things we’re trying to do is make it easier for you to turn to people you already know quite well for cues on investments rather than relying on strangers…Kind of like working on a problem set together with a concentrated group of others rather than hacking at it alone. After all…investing can feel like hard work sometime, and one way of making work less tedious is to have friends to talk to as you go through it together.

  11. ahmed dapoophoo

    August 21st, 2006 at 12:12 pm

    What is their monetization scheme? Did these guys receive funding of any sort? This is the first news I’ve heard of them.

  12. ahmed dapoophookar

    August 21st, 2006 at 12:17 pm

    What is their monetization scheme? Did these guys receive funding of any sort? This is the first news I’ve heard of them.

  13. Brian Balfour

    August 21st, 2006 at 4:04 pm

    I posted on these guys about 3 months ago….

    http://www.socialdegree.com/20.....ng-stocks/

    Very quality site

  14. Anand

    August 21st, 2006 at 4:06 pm

    Sounds like a good idea. Right on the theme of social networking. I think that people like to talk, give advise and take advise about stocks and investing. I hear many people talking about investing in many of the parties, althogh, less than what you may have noticed during the dotcom days. If people can talk about it in parties and get togethers, why won’t they talk about it online especially in an online community of like minded people. I have not observerd the online experience you get at this site, but, I will go to such a site that can give me a good online company and experience where I can share my investing experinece and learn from the community. At the same time, I will go ther only if they better and informed crowd than what I see on some of yahoo finance message boards :).

    -Anand

  15. Clint Chao

    August 21st, 2006 at 4:17 pm

    re: Marketocracy, all they are aiming to do is beat the target market index, the S&P500. It’s not chance or randomness, as Speculate stated, as they’ve been doing it since 2001, and with real money (>$50m assets). It’s a real business, generating returns for thousands of shareholders for the past 5 years. If you put money in MOFQX at inception (in 2001), you’d be up about 60%, as opposed to up 25% if you put in the S&P500, or 30% if in the DJIA. This wasn’t the easiest thing to do in the past 5 years, but they managed to endure some pretty difficult and varying investing cycles with admirable returns.

    The general theory is that there is no one investor or investing style that can be at the top of the market all of the time, but that there is some investor or investing style that is the best at any given time. So, we measure everyone’s performance in a very uniform way (by net asset value, just like all mutual funds). The system works to find skilled investors - many of the community are in the professional investing business, but it’s been fascinating to see them compete against ordinary joes when the ground rules are the same for everyone.

    It’s a free way to find out if you’ve got the goods to invest - go to the site and sign up for a free account and you’ll create a virtual mutual fund to manage. All they ask is that you comply to standard mutual fund investing rules (for diversification, balance, etc) so that they can weed out the people who get lucky (like overweighting their portfolio with one stock that happens to go through the roof) and find those that can consistently beat the market in a diversified enough manner to lower the risk of their portfolio. Once you build a long enough track record, you’ll know how you stand against the others in the system, like ist.martin, up 500% since 2001: http://geobay.com/5136c7.

  16. howard Lindzon

    August 21st, 2006 at 9:16 pm

    thisd is plain a bad idea. If I was good - why would I share it with anyone. I would blog :)

    Crowded space and all have no chance based on the existing fetureset.

    These are tech guys trying to crteate something for MBA types

  17. howard Lindzon

    August 21st, 2006 at 9:26 pm

    actually - at least stocktickr has a good feature set that adds value

  18. Daniele Levy

    August 22nd, 2006 at 8:58 am

    It is an intersting concept, but very, very difficult (impossible?) to execute in a way that is useful for the consumer, legal for all involved, and profitable for the operator. I hope they succeed - let’s see!

  19. Jason Fang (SocialPicks)

    August 22nd, 2006 at 10:51 am

    Howard–I dropped you a note on your post.

  20. Brian Murphy

    August 22nd, 2006 at 7:43 pm

    Interesting concept, trouble is in the execution. In order to evaluate “skill” versus luck you need years of data. There are clearly ways to monetize the content. One being the way Marketocracy is doing it…though this isn’t implemented as well as one would like (ie. combining skillful picks into a portfolio takes a lot of crunching power and mathematics that haven’t been worked into Marketocracy as of yet). See books by Grinold and Kahn for more info on this.

    Another way to monetize is to let the participants “monetize” their content…ie) charge for viewing their picks.

    Field is extremely crowded at this time and I’m not sure individual stock picks makes a lot of sense for most investors.

    Along the lines of “value added”, if you look at Marketocracy, they’ve done fine against the S&P 500, but if you look at their style over the past 5 years it’s more correlated to small/mid-caps. And against that benchmark the returns are just mediocre on a risk adjusted basis. That’s why Morningstar rates the fund as it does. Sure, better than the S&P 500 but my hunch is that there is always going to be a bias towards small/speculative fare amongst the participants, so when small/mid-caps go out of favor, the fund will likely show continued negative “alpha”.

    We’re a traditional asset management shop, working on portfolio construction at the 401(k) level with a goal of out-performing various market-based benchmarks by 3-5% per year using funds within each individual plan. Not social networking per se, but real value to participants in the plans we cover - many of whom don’t have an interest in investments, or would like corroboration on their own ideas.

  21. Investorial

    August 22nd, 2006 at 7:59 pm

    Glad to see this site got Crunch’d. I just found out recently that one of my University friends is part of the founding team!

    http://investorial.com/blogs/s.....ts-web-20/

    I was invited to the early alpha phase… and made a review of it. Went back recently to try out things again. The interface is still a bit buggy and updates are not readily loaded up. But I’ll be watching this site’s development. At least they are willing to listen to bloggers!

  22. DJ

    August 24th, 2006 at 2:21 pm

    reminds me a bit of SeekingAlpha.com, the leader in the field……

  23. Johns Wu

    September 29th, 2006 at 8:47 pm

    that’s me in the pic!

  24. Boris Bogatin

    December 3rd, 2006 at 11:43 am

    Excellent concept. The naysayers are missing a major point. Can’t comment too much here, but would say that the performance of the Marketocracy fund is illustrative but a bit disappointing. Only because the concept has a lot more potential if applied probably. Requires application that does:

    a) a better job on the investment funds side - different fund pool
    b) a different type of compensation structure
    c) a different reward system for the individual

    SocialPicks, and the other sites like it, also exciting from the perspective of “an enhanced message board” for stock picks. But narrow innovation given an already saturated market for the field. This is an enhancement.

    Marketocracy is a concept that has potential in a total new, revolutionary direction. Just short on execution at this point in time.

  25. steve

    January 29th, 2007 at 2:27 pm

    I like the Social “CAPS” site run by Motley fool

    One of the great features beyond lots of amateur portfolios is that they construct portfolios for hundreds of wall street pros based on their picks.

    One can see that the clowns on many pundit shows etc are pretty clueless. Or one can locate pundits that actually have some success

  26. pete

    January 30th, 2007 at 11:16 am

    great- I love this idea, madness of crowds in real website. oh, if I had the time to track these idiots that make predictions. this wet nurse approach to investing is so doomed.

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