SocialPicks: Stock Pick Research Meets Web 2.0
I received a private alpha invitation to check out
For those of you still in the dark, Web 2.0 is the internet’s next incarnation where social applications help facilitate networking services among its users. Some famous examples include Flickr, Wikipedia, Digg and del.icio.us.
Quantity vs. Quality
Don’t reinvent the wheel! What did those great Web 2.0 sites do well? Flickr had all types of photographers but it has attracted many great pictures and photographers. Wikipedia is a great source of information, Digg showcases popular articles that are considered great by its voters, and del.icio.us allows users to share websites that they felt were great. So what should a stock research site have? Great research / analysis of course!
Even in this private beta, you will find no shortage of member reviews and stock picks already in the system. But the quality of those reviews can leave much to be desired. For example, I found this single-sentence analysis on Amazon’s stock:
“It’s a good stock that’s undervalued because of stupid short-term thinking “
Simple, straight to the point; yet NOT what you want in an analysis! I surfed around for more stock analysis and were surprised to find a few obscure value-plays such as 2 analysis on Handleman Co. I’m not sure if they were also followers of Irwin Michael, who picked Handleman as his value-favourite. Compare Irwin’s analysis to these 2 examples!
Analysis #1: At $8.50 a share, that’s a market cap of $171 million.. net book value is $221 million.. they are profitable, pay dividend and buy back stock. It’s business may be in trouble down the road, but it’s seems to be a good cigar butt type of investment hear due to low valuation. Do own research.
Analysis #2: This company is simply hated. How else can you explain its valuation? It trades at a significant discount to book value. Its P/S ratio is 0.1 - no, it’s not a typo - 0.1, P/E and price-to-cashflow are single digit numbers. I realize that it does not compete in a terrific segment, but with growing revenues (by acquisition), the company is growing its share of its category, it’s buying back stock by the truckload, has low debt ratio, so no worries about a cash crunch and I wouldn’t be surprised if it gets taken private.
The problem with the SocialPicks reviews is that their amateur tones don’t share the entire story; leaving gaps wider than a hockey player’s teeth. The onus is up to the reader to intelligently decide what to do with this information, and more often than not, emotions can take over for that impulsive buy or sell. Also, this system may be susceptible to pump-and-dump spammers who can easily abuse SocialPicks for their own gains. The quality of analysis and quality control is simply not there yet.
Wisdom/Stupidity Of Crowds?
The basic premise of SocialPicks is to share knowledge and facilitate the whole “wisdom of crowds” philosophy for picking stocks, and that’s where it excels! However, I love to play the contrarian role and also believe that the majority of the irrational masses can get things wrong (or at least over-exxagerate positives and negatives). So why would I benefit from doing research where the masses gather?
Similarly, what would I (being contrarian) gain by revealing my stock picks? I’m not a trader either. Fundamentally, stock forums and stock research sharing sites diverge from my own investing philosophies. However, that doesn’t mean a contrarian doesn’t have a reason to “keep an eye” on the mass opinion. Just less of a reason and different motivation. There is however a reason I would really like SocialPicks, and that is ……
Blogger Publicity
I’m going to reveal secret to stock bloggers everywhere…. SocialPicks is a great tool to publicize your blog! For example, I took my previous post on Tim Hortons, copied and pasted an excerpt while leaving a referencing URL leading back to my blog. Search engine optimizers may also want to cash in on this loophole to promote your stock-picks blog!
Jim Cramer Again??
I’ve always blogged negatively about Jim but it was funny to see his name on SocialPicks’ feedback page. The interesting question they asked was “Do You Watch Jim Cramer?” with the following choices you can use to answer:
Yes - almost every episode!
Yes - occasionally
No - but I know it
No - huh? Who’s Jim Cramer?
How about an answer along the lines of “I don’t care for his advice or antics”? I see that even Standford students/alumni (where the SocialPicks founders are from) are not immune to the reach of Jim Cramer.
Thumbs Up Or Down?
Though I am not able to whole-heartedly say that SocialPicks is a research site that I would use (at least not until the review quality improves). It is a fresh, well-executed idea that the major financial sites can strive towards. Sites like Google, Yahoo, TheStreet, Motley Fool, MarketWatch, StockHouse would benefit by learning about this new concept of social networking with its interactive advantages over traditional forums.
I want to appreciate Jason Fang for inviting me to participate in the alpha testing. I would like to reciprocate by giving out SocialPicks invites to the first 8 people to leave comments for this article. But it’s not that easy! You have to comment on what you would be excited to experience / learn by joining SocialPicks. The first 8 commenters will receive invitations from me shortly!
[Editor's Note: A warm welcome to the readers from the Carnival of Investing #26 where this article has been featured. Stick around as there are more investing articles right here at Investorial!]
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7 Responses to “SocialPicks: Stock Pick Research Meets Web 2.0”
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PFDigg.com Says:
June 3rd, 2006 at 2:27 pmSocialPicks Review…
Here is a review of the latest Web 2.0 stock research site, SocialPicks…
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Jason Coleman Says:
June 8th, 2006 at 10:33 amGreat preview, Vince. The SocialPicks guys are planning on going into a “private beta” (different from their private alpha I suppose) soon, and I will probably be doing an updated preview of the site at InvestorGeeks. In the meantime, I’ll comment on some of the things you bring up in your article.
I would agree with you that the quality of analysis on the site is lacking. Also, probably because of the nature of its user base, the focus is largely on tech stocks. How much this will improve when they lift their invitation-only restriction is unknown. If they can gain a lot of traction and build a user base, there may be enough high quality write ups to balance out the bad ones.
I believe SocialPicks should try harder to conform to financial analysis standards, whereas now they seem to conform more to web2.0/social networking standards. They have a tough balancing act ahead of them. I mean the social networking stuff is the *new* thing they are bringing to this space. At the same time, making the views and user interface familiar to the finance community will make it easier for them to pick it up. A more familiar and “professional” layout will also encourage people to submit more “professional” material.
You hit on another key factor to SocialPick’s success. You ask “What would I gain by revealing my stock picks?” and then sort of answer that question when you point out that bloggers can gain traffic by posting their reviews there. SocialPicks needs to work very closely with the finance blogging community and make it as easy as possible for bloggers transpose content from their blogs into SocialPicks and visa-verse. There is a community of people out there who just loves to create content (some good, some bad); working with them will be key.
So in my mind, there are two goals the site should strive for. (1) Become a source of research like any other professional analysis firm (although with amateur, user-submitted content) by making the site design and layout more accessible to non- techies. (2) Become the standard way for finance bloggers to share their stock picks and analysis by working closely with the blogging community.
p.s. I don’t nee an invite
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jrm Says:
August 23rd, 2006 at 4:57 amGreat article
I discovered SocialPick 2 days ago, and i really want to test it
I work with a french investment banking company, based in paris
Do you still have some invites to send ?
I would be very thankful -
William Says:
August 23rd, 2006 at 7:00 pmI’d be interested to see if individual investors would really take the time to create meaningful reviews and picks; or if it ends up being another useless mess like Yahoo! Finance message boards. Also to test whether “Wisdom of the Masses” really works
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funamentalinvestor Says:
January 17th, 2007 at 2:47 pmCheck out http://www.InvestorFace.com - another very good online community designed to find, review and share investment ideas.
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gammatester Says:
May 29th, 2007 at 12:00 amI got a chance to play wioth social picks web site recently. I would like to politely differ on some of the views mentioned (probably now there are new features which make it smarter)
Users now are rated based on accuracy of their picks and their social picks score. The social picks score in turn depends on lot of factors including other user’s vote on the analysis.
So to circumvent the bad analysis problem, I would read the analysis of only those users who have a high accuracy and a higher than average social picks score.On revealing your own picks, I guess smart people always like to show off. If you have a portfolio which is appreciating higher than other people’s, you would want it to become a topic for discussion. I do not think that you will make less money on your picks if 100 other ppl know about them
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john Says:
October 18th, 2007 at 12:24 amI found these other sites also very useful,
