SocialPicks, a social network around stocks, is officially out of private beta and has added features to make it one of the more compelling places for stock junkies to hang out. SocialPicks tracks imaginary portfolios as they shrink and grow, ranking users by paying close attention to how well their predictions pan out.
The new release comes with a face lift, and a tweaked ranking calculation that takes into account the average return your picks, your accuracy in calling the direction a stock moves, and how highly the community rates your advice. SocialPicks tracks a series of “celebrity” stock pickers like Jim “BOOYAH” Crammer or Warren Buffet and the hope is that professionals will use the service too, in order to publicly assert their trading prowess.
They also hope to generate revenue the stock picking data of top users, PicksPal style. The company has started with a contest for $1,000 to attract some top pickers.
Their new Blog Tracker product is really interesting - submit your financial blog to SocialPicks. They’ll parse your RSS feed to try and determine when you are giving an opinion on the future performance of a stock (human verified). All of these blogs are then ranked by how well these predictions do over time. Currently Main Street Stocks is the top rated blog with a 66% accuracy rating.
If you’re interested in SocialPicks, see our coverage of Motley Fool CAPS as well.
Social stock picking is a flaw model, if they want to succeed it’s better not based on the social networking model. Stock picking is one of those activities that your action of picking directly interferes with the result you are forecasting (try asking Steven Hawking about this).
Also, I think tracking wall street ‘experts’, and thus fulfilling their own prophecies, is just evil. You are helping these already rich and powerful individuals gaining more power. And I thought the purpose of social networking/web 2.0 is to give control to the users. This will surely result in a lot more market inefficiency and broke investors.
If you really think about it, this is just a website that let people showcase their portfolio (real or not, who knows), with the added weight toward the good investors. Right now their algorithm won’t work because of the small set of data sample. But if they try hard enough, it will look just like the price chart you can pull out from any financial website. That is the real vote, each investor buying a share has a vote, simple.
I think they should go the opposite, let people vote on the worst analysts on wall street, the anti-digg.
How does this compare to Jim Cramers new site.. http://www.StockPickr.com ?
I haven’t gone to the site yet; but out of all the social network models, i think this one would work..you have to figure audience… MySpace == stoners, FaceBook == WannaBe College Students, LinkedIn == Bidness Networking, StockPicks == Everyone else.
All you have to do is take Stock Porfolios, add ETrade with LinkedIn and you have a killer.
I think that if these sites had to take into account their impact on the market, that would be asserting how successful they had become. I don’t think they have to worry about this for a while.
As to the influence over individuals, I think advice from any source has to be judged.
FYI, started a thread on the overall subject of wisdom of the crowds in the forums. This seems like a common debate: http://forums.techcrunch.com/f.....eadID=1240
I posted on why “imaginary portfolios” are not as compelling as real trading data as a social stockpicking tool earlier this month - click on my name to read the post if you’re interested
I pitched this idea to my partner (before we decided what to startup) and his response was:
“Isn’t the stock market already effected by the choices of other people? Don’t people interact with it on an extremely regular basis as it is, and have a strong effect on other buyers? It doesn’t get more social than a bunch of people buying/selling shares quickly and the rest of the world be effected in their wallets. Plus, don’t we already know who the top traders are? The king of the hill’s name is Warren Buffet, and he’s the second richest man in the world. This social network has already been done in the most real way. If you want to get rich with the stock market, then u play the stock market. NEXT!”
ditto.
LOL. Just LOL.
Stock picker prediction sites are total B.S… because after all, the market itself is the prediction market.
Millions of transactions take place each day and determine a stock price movement, and so I highly doubt even thousands of “e-picks” will be able to make a prediction. The reason being that those who pick it online are already affecting the market by placing the real trades. This is totally B.S…
the socialpicks logo is not linked.
I prefer marketocracy, but maybe I am old school??? Social stock picking works on marketocracy.
Best wishes for success but this is going to be a tough, tough sell long-term. Why?
How is one to know if an individual is lucky, or has skill in stock picking…evaluate them - and that’s what SocialPicks intends to do. Yet, in order to distill the information into meaningful statistics, they’ll need years of data from each participant, not a few months. Why? In a bull-market (ie. July to December of last year), the “best” stock pickers will be the ones with exposure to high beta stocks. In a market favoring “risk” sectors such as emerging markets, tech, and small caps will do well. Sure, the returns will look good for awhile, but when the sector, style goes out of favor, so will the picker’s performance. In order to distill the information down to a reasonable level of confidence, you’ll need to go through cycles - which take years.
If I call a coin flip correctly, am I skilled or lucky? What about 2 or 3 times in a row, or how about 3 out of 5? Hard enough to distill skill, from luck there, right? Trouble is, with the market, the “coin” is biased…and measuring how biased can only occur after the fact…so it’s infinitely harder to determine skill vs. luck.
Marketocracy has done alright, but it’s flawed as well. If adjusted for the composition of the portfolio (small stocks outweigh large), the performance has been merely mediocre since it was founded. Trouble is, most casual observers measure performance against the S&P (large caps) and deduce that performance has been strong. What happens when small caps go out of favor? Look at performance over the past year for an indication: 6.65% versus 12.78% for the S&P and 13% for the small cap index…underperforming.
We looked into what I term collaborative investments about 5 years ago and concluded that the concept was flawed - mainly due to the long time series needed for each participant. The second problem (bias towards specific sectors) is solvable, but Marketocracy doesn’t seem to do much here. The third is enticing users to stick with it long enough to get some meaningful stats. How many participants want to play this game and wait the 5 years plus needed to deduce “skill”?
oy - for the third time.
A lot has been happening in the social stock picking space of late. In my view it comes down to this: no one is going to follow Yorgos Voyiatzis (currently the top stock picker on socialpicks.com). No offense to Yorgos, but I don’t know if he is good or lucky, etc. With any of these sites, one should look for solid content, ie, stock ideas. As well as the ability to benefit from a large community (ie, hopefully more stock ideas). In just trying out socialpicks, one of the first things I did was check out the Pro Picks section. To my amazement, I checked out Bill Miller and realized that the way his “return” is being tracked is by assuming the cost basis of the stock is whatever the price was as of the date of the public filing (so in this case 9-30-06). And I can’t tell for sure but it looks like all positions are being given equal weights. So in both cases it seems to be grossly inaccurate. Very weak especially when comparing to http://www.stockpickr.com, which was reviewed here a few weeks ago. I checked out that site which was founded by James Altucher (who I have followed on thestreet.com for years). While it seems he is still refining all the different bells and whistles, the site is robust in terms of content and should get even better if Altucher rolls out all the new features he has talked about in his newsletter. Should be interesting also because Jim Cramer is involved. I guess time will tell.
Social investing is a valid space - as a media venture - because a fair amount of social activities revolve around investing and because ads for financial services are at a premium. To succeed, social investing website will have to overcome three top challenges:
- build a community while keeping spammers at bay;
- rank and rate information in a way that makes financial sense
- aggregate content beyond their own website.
See a more in-depth analysis on my blog: http://phc.typepad.com/infonom.....estin.html