Blogging About Stocks

Weblogs Inc/AOL launched Blogging Stocks this past week and it has been criticized by The Stalwart and others.  Jason Calacanis has pretty good roundup of the good and bad reviews on his blog.

All you have to do is give Blogging Stocks a quick read and you know why its getting criticized. The posts are not particularly insightful and worse - they aren't very actionable.

Insight and actionability are the key to writing about stocks.  Tell me something I don't know or didn't really understand and give it to me in a way that leads to a trade.

But I don't agree with the premise in The Stalwart's title - Why Blogging and Stocks Might Not Be a Good Fit.

I think blogging and stocks are a perfect fit.  The stock market is all about knowing something before everyone else and being able to profit from it.  Blogging can and will and already has impacted Wall Street. My first introduction to blogs was seeing Jim Cramer in action at TheStreet.com. When Flatiron Partners invested in TheStreet.com in early 1998, Jim was blogging stocks like crazy and it was an impressive feat.  I didn't realize he was blogging at the time, but I understood immediately the power of what he was doing and to this day, I feel that blogging is a completely natural act when it comes to thinking about and trading stocks.

What has to happen though is lots of people who are good investors, analysts, and/or traders need to start blogging about what they are thinking and doing. Writing something down is a great way to think about an investment and I think we are going to see more and more investors do just that via blogs.

It's already happening. The Stalwart does a good job of blogging about stocks.  Here's a post from The Stalwart about declining Jeans prices (citing a fashion blog as reference).

Seeking Alpha has created a network of blogs about various investing sectors.  It showcases the power of a blogging platform for investors.

I know a few former Wall Street analysts who are doing other things now but still blog about stocks from time to time.

Andy Kessler now mostly writes books and a column for the Wall Street Journal, but his WSJ columns are available on his blog.

Henry Blodget blogs about stocks at Internet Outsider.

And Bill Burnham blogs about stocks and other interesting things at Burnham's Beat.

Some of the blogs on my blogroll are home to interesting stock blogging.

Mark Pincus told everyone he was shorting eBay at $39/share in October 2005 and explained why as well.  The stock went up to the mid $40s by the end of the year but is now at $34/share.  It would be great if Mark posted on whether he's still short and why.

Howard Linzon is a friend of mine in Phoenix that trades stocks and he writes out loud as he thinks about his trades.  This post is about Apple Computer. He says it's not a recommendation to buy the stock, but if you read it, he's got to be long Apple and he makes a convincing case why we should all be long Apple.

I have also blogged about stocks from time to time.  In December of 2004, I proposed a hedged trade going short on Sirius and going long Clear Channel. Both stocks have declined, but Sirius has falled much farther generating a nice gain.

I think there is a ton of insight, and much of it actionable, on blogs right now. It's just not on one single blog. Blogging about stocks seems to be more of an opportunity for aggregation (ala Memeorandum) than it is an opportunity to recreate TheStreet.com with a blog.

With tools like PersonalBee and Megite, anyone can create their own Memorandum for stocks like Gabe Rivera did for Robert Scoble's tech feeds to create Memorandum.

That's what Jason should have done with Blogging Stocks instead of trying to create a destination blog for stocks. You need someone like Jim Cramer to make that work and he's got something like three day jobs already.

UPDATE: Gabe Rivera commented on this post and explained that Memorandum was not built exclusively on Robert Scoble's feeds, but rathher a much larger set of feeds that he adjusts on a daily basis.  I stand corrected and apologize for trivializing how Gabe created Memorandum which is an incredible resource for those interested in staying current on what's happening in technology.

Comments

[howard Lindzon]

Excellent. It seems like kids from My Space are writing the AOL stuff.

I am sure that will improve, but the reason Cramer was so good as I have said in some pieces is that in the beginning, I felt he was writing just or me - a newbie hedge fund manager.

The reason he has no SOUL anymore is that he writes for a Board of Directors and Fidelity and touts stocks for GE on CNBC for ratings.

He was always good enough to get ratings so that is the shame of it.

[Jason]

There are more feature stories coming... when you start these blogs there is a double-edged sword to covering everything, and that is that some folks will say "this is not much better than a newswire (i.e. google news).

However, the baseline coverage is what brings in the tips and gets the bloggers into the beat. So, you really have to do those.

I think the most interesting thing we're doing so far is the "insider blogging" feature where we scour the blogs of people inside companies to try and gain some wisdom. The folks out there who are just figuring out what blogs are need the round up/get up to speed posts. They don't know about henry's blog or who Pincus is... so it's really our job to bring those voices to the mainstream and pull them into the conversation.

I'm not sure we can ever be Mark Pincus or Henry Blodget in this model--those folks are not going to come to work on a blog. However, we can be the bridge to their conversations and the MSM ones.

It's a work in progress... we'll get there.

[Charlie Crystle]

Read my email.

[mark pincus]

i covered my ebay short when i got nervous i was too early. i do believe buying skype was the biggest sell sign on that company.

generally, i love the idea of a way for like minded peers to share stock picks with some real accountability - ie. a blog widget showing the performance of past picks but better would be showing our real portfolio ownership and performance on an indexed basis so we keep dollars out of it. that way we separate the BS from the BSers.

i'm primarily a macro investor. i've been all oil stocks for about 24 months now. i dont see anything compelling in public tech or internet. keep looking for new ways to safely go long oil, short dollar.

[Milo]

Creating a blog aggregator would've been a departure from their business model, so I don't think it's too surprising that they went the build-a-blog route.

As you note, there are a few of these aggregators out there specializing in the stock market. Another one that you didn't note that is worth a look is TheMarket:
http://investing.nimbleferret.com/

[Gabe]

Fred, you said: "With tools like PersonalBee and Megite, anyone can create their own Memorandum for stocks like Gabe Rivera did for Robert Scoble's tech feeds to create Memorandum".

It's my opinion is that that there is no other tool to create "your own memeorandum", but hey, relax the meaning of "memeorandum" and I guess it's true.

But it's just incorrect that tech.memeorandum is based on Robert Scoble's tech feeds. Nearly every day for the past year the composition of the source seed set has been modified to reflect new data. Some time last summer I analyzed Robert's feeds and influenced my source configurations based on them. That same day I did the same for other bloggers as well.

[howard Lindzon]

Mr. Pincus

You should have been long gold as a way to short US dollar

BillCara does a good job covering the metals and oil from Totonto

[Gabe]

I'll add one more point: I'm fairly sure that no service you mentioned, memeorandum included, could create a list of blog posts about any of these companies worth reading. Mostly because there actually isn't good enough content out there on blogs, but secondarily because nobody has good enough semantic analysis yet.

If automated articles are in order, I'd used topix.net, but the results would largely be non-blog posts, and still not as cohesive as what a single blogger editor could produce.

If Blogging Stocks sucks, I think the only fix is just to hire better bloggers.

[Bill Davenport]

I agree that it's folly to try to create a destination blogging site such as this, and that a blog aggregator is much more interesting. The aggregation model as you suggest needs to not aggregate a handful of blogs, such as SeekingAlpha, but search a large percentage of blogs. And it needs to ideally both tag the comment (positive, negative, neutral) as well as rank individual entries to help filter out the noise. A final note is that even if the blog entry is on the company, not the stock, it can be enormously helpful. For example blog entries on ThinkSecret, ScriptingNews, A VC, etc. What I'd like to see is a way to find company information (whether or not it's specifically stock related) across blogs and websites on a daily/intraday basis.

[Justin]

They should just acquire: http://www.seekingalpha.com/

[Michael Eisenberg]

I blogged on this topic on my blog above and it was picked up by seekingalpha at http://internetstockblog.com/article/9903.

I agree with your general point that aggregating is a better approach than hiring bloggers but I question whether a memeorandum-like approach can work in the world of stocks. Given all the stock manipulators, inane yahoo message board commenters and assorted other hokey financial "advisers" that are now blogging, there might be too much incentive to game a memeorandum-type system. The financial world still needs editors who can pick out the good stock bloggery from the bad, tickerize it and sectorize it like seekingalpha.com does. Oh, and I like the fact that they pick up my blog from time to time :)