Web 2.0 for investors is alive and kicking

By Dominic Jones

I SAW today one of the big benefits that social/web 2.0 technologies will bring to individual investors.

I’ve been wondering a lot about this, how Web 2.0 technologies might benefit investors, and have been somewhat at a loss to figure it all out.

Then tonight I read a really interesting article on TechCrunch about socialPicks, a new social networking website for investors.

The idea is simple enough: people with an interest in stocks open a free account, choose their stocks, write research, and then rate each other and be rated on their accuracy in choosing winners. The rating system keeps things honest.

Member Page: socialPicks members share stock picks, their portfolios and their analysis of companies.

SocialPicks, I learned, isn’t the only such site. There’s a bunch of them, including Feeling Bullish, Bullpoo, Gradr, Stocktickr and Digstock.

I looked these sites over and they all look pretty cool.

But I couldn’t figure out why I would want to use them if I was an investor. I don’t have a particular interest in trying to show off, and I don’t really want to have virtual conversations with a bunch of strangers about my thinking behind my stock picks. Nor am I likely to take their advice seriously.
I know enough about stocks to know that I really don’t know that much about stocks to be able to offer any picks. I thought briefly about just opening an account and building a portfolio of equity, fixed-income, real-estate and maybe some commodity ETFs — and then waiting 10 years to beat almost all the other players in the network. You know, a Random Walk portfolio of sorts.

But that would be boring — and this is supposed to be fun, fun, fun.

Company Page: socialPicks members’ recommendations are aggregated by company, in this case Apple Computer.

So I was stuck. What to do with the investing sites that Web 2.0 has so far offered up?

And then I saw it, the real value of Web 2.0 technologies is simply the democratization of web publishing.

Smart people who previously didn’t have tools to web publish are doing so and their knowledge and wisdom is available to investors free.

If you know how to use Technorati, you will be able to find which blogs are linking to the article about SocialPicks. I found Roger Ehrenberg‘s blog Information Arbitrage that way.

Ehrenberg has spent over 17 years on Wall Street in M&A, Derivatives and Trading, but now runs a company doing interesting things with Internet information for institutional investors.

He helped me see what Web 2.0 really means to individual investors. And while it’s not sexy or fun, it is profound.

Take Ehrenberg’s assessment of SocialPicks and other social stock picking sites. It’s incisive, sound, utterly non-promotional and just as good as the best damnded advice I’ve ever seen from smart people in the investment industry.

From an investor protection perspective, Ehrenberg’s post is enormously helpful. It’s good advice for people who might be thinking about using one of these sites or relying on what they learn from them. It’s the kind of thing that regulators should be doing.

So for me, one of the true blessings of Web 2.0 from an individual investor’s perspective is access to experts that previously weren’t online. There are thousands of them, all experts in their own domains.

The problem is finding them and stripping the wheat from the chaff. Now if someone could fix that…

Dominic Jones

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