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Think Big. Move Fast.

The WSJ (subscription) has a good article this morning on a new set of networking sites for investors. Techcrunch separetly has a review of stockpickr.

We’ve seen a few of these stockpicking sites over the last little while. I think that there is a risk of a conflict of interest in touting stock picks, although if people are truly your “friends” and not just people you met on the site, this might get mitigated. Otherwise, it seems like a happy hunting ground for stock tip spammers.

The best remedy for this to my mind is to use real data. Stockpickr lets you see Warren Buffet’s actual portfolio – not much opportunity for “gaming” that system!

If there were a way to verify people’s “stock picks” – say by tying into brokerage accounts with permission to verify that they really do hold those stocks or really did make that trade, then you’d have some very interesting data. As Seth and Fred have said in the past, implicit data is much more interesting (as well as painless to collect if given permission) and truthful than explicit data.

Imagine being able to see other users’ actual accounts and trading history, and being able to tell the real trading superstars from the ones who weren’t willing to put their money where their mouth was. Would active traders be willing to pay to get real time access to the transaction flow of the top traders? People already do this for Jim Cramer. A subscription model like this would potentially generate enough money to incent top traders to open up access to their real time trading and their portfolios. They would be able to earn a nice secondary income stream and it actually HELPs their positions if others follow them. But if these active traders start gaming the syste,, people will stop following them and they run the risk of losing their own money.

I’d like to see someone take a shot at this!

  • http://worthio.com Nate

    I totally agree that this could be ripe ground for stock spam, which is like 80% of my spam in the last few months. Uggh.

    So to address the gaming and spam situation you brought up, we took an approach at Worthio.com to let users have karma that changes based on performance of your votes.

    We keep track of whether people’s bullish or bearish votes on stocks actually come true. If they do, you get more karma and we trust your votes more in our rankings. And vice versa, if they don’t come true, we don’t trust your votes. Then we have a feedback loop constantly updating the stock rankings.

    We just got this product out there, so its early. But we tried to make it as easy as possible to get started and have fun with it.

  • http://www.hellomartin.com Martin

    Keep on watching Zecco.com :)

  • http://www.BootStrapper.com Richie Hecker

    This is nothing new. It existed, it also went bankrupt. Anyone remember Iexchange.com? People were able to post stock picks and reports and other users bought reports. I used it and made a few bux selling my research since I had a good ranking. However, for the most part it was crap. Past performance does not indicate future performance. Personally, I think stock tips from friends are worse then coming out with them yourself … once the network kicks in its ripe for fraud.

    Richie

  • http://www.BootStrapper.com Richie Hecker

    actually iexchange didnt open up your account just your research, that would be interesting to open up an account, i wonder if any of the major brokerages offer api’s…probably not…would be tough to set up

    Richie

  • http://www.howardlindzon.com Howard lindzon

    Agree with Richie. Nothing good comes out of this. there is no perfect system.

  • http://www.stokblogs.com Theo – StokBlogs.com

    We have a virtual trading system at StokBlogs.com. The idea is that our users blog about stocks and then they add it to their virtual portfolio. That way, you can see over time whether the person knows what they are doing or not. We display transactions, rankings, holdings, etc.

  • dannynerezov

    interesting…six odd months after the posts you guys launch vestopia

    very proactive and very impressive

    sending massive kudos in your general direction :-)

    http://ouriel.typepad.com/myblog/2007/06/vestopia_launch.html

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