Entries Tagged 'twitter' ↓

I mentioned before that I love StockTwits. But has it helped me this year?

Sadly, the short term monetary answer is “not yet”.

However, the long term answer from an educational perspective is “yes”. Because as obvious as it sounds, while StockTwits is great for idea generation, ideas are $0.008333333 each, and ideas are no substitute for doing your homework.

Case in point: I buy the premise of most of the folks I follow on StockTwits that commercial real estate is hosed in 2009. And the ticker that is most mentioned when determining how to play the plunge in commercial real estate next year is $SRS. Makes sense. Go UltraShort Real Estate if you want to dial in profits, right? All the cool kids are doing it.

Wrong. $SRS is one of the inverse ETFs that is only really useful to hedge for a day, and it exhibits the fundamentally broken tomfoolery that TraderMark highlights, with the added negative of being susceptible to the sawtooth effect for eroding gains over any period of time that that Fortune8 demonstrates.

The short version: these are horrible vehicles to hold for any kind of intraday trade, let alone as part of any kind of buy and hold hedging strategy. Go read those posts before investing in any double or triple ETF, or in any inverse ETF. As TraderMark puts it bluntly:

I am beginning to wonder if due to the structure if all these ETFs are destined for a near $0 price in the “long term”.

But is my use of StockTwits to blame here? Absolutely not. I plunged into $SRS trusting a premise and voices I agreed with, and even had one good short term trade on $SRS. I was the one who didn’t fully understand what I was investing in before jumping in. I was the one who didn’t read the prospectus. I’ve learned my lesson (and I’m stubbornly still long $SRS at cost basis of $97 and change). But here’s the happy ending. The very insightful blog posts above (TraderMark’s and Fortune8’s) came to me through StockTwits participants including Fortune8 and TradeFast. So I wouldn’t have learned my lesson without getting references to their more detailed analysis that explained what was going on.

My only regret is that they didn’t tweet that stuff in the beginning of December rather than at the end. The good news is that I’m up enough from my $AAPL and $AMZN trades this year that I can tolerate this $SRS pain as I look for an exit (take it now and treat it as tuition? Or hold it and hope for more irrational exuberance to take hold?) and look for a more suitable proxy for a commercial real estate collapse.

So in the end, I paid for a couple of lessons this year. In this one, I not only got reinforcement on doing homework, I also traded up voices I’ll listen to: Fortune8, TradeFast and possibly TraderMark (if this silent twitterer is the same TraderMark from the blog.)

My observation over the course of December is that StockTwits currently holds much more value for the daytrader than it does for the buy-and-hold investor, or for the casual intra-day trader. In fact, I’d say 95% of the value of StockTwits accrues to day traders. There was money to be made in $SRS this week by through the use of StockTwits, but to make that money required a day trader’s level of attention. One of my goals for 2009 (which I’ll detail later this week in a kick-ass post for the ages) is to learn how to exploit StockTwits in 2009 as a tool for someone who isn’t a day trader, someone with periodic, limited attention span. In short, A StockTwits User Guide for the Idiot Retail Investor.

Stay tuned.

Earlier I posted a very brief post on how I got Twitter. Recently, Tim O’Reilly did the same.

The key insight, which I’ve made elsewhere while trying to explain the value of Twitter in one-on-one conversations, is this:

In many ways, Twitter is a re-incarnation of the old Unix philosophy of simple, cooperating tools. The essence of Twitter is its constraints, the things it doesn’t do, and the way that its core services aren’t bound to a particular interface.

I truly believe that Twitter, or something like it, will be looked upon as one of the essential tools of the internet, as transformational as email or RSS/Atom syndication: a universal utility.  The only impediment is standardization, and that path would seem to lead through XMPP.  Unlike a distributed service such as SMTP, Twitter’s utility relies on centralization of identity and service; an XMPP-based Twitter might have to arise out of a million internal corporate Twitter clones being exposed over the net via XMPP, in much the same way as external SMTP gateways eventually obliterated AOL’s walled garden approach to email.  The race will be whether that outcome, facing many barriers, will come before Twitter itself is enshrined as a free public utility used to drive other business in the same way that Google search became a free service.  Right now (as O’Reilly points out, Twitter has no credible competition which itself is a risk; if Twitter sits still, the walled garden becomes a fatal limitation since it will effectively become a bet against the internet.

Tangentially related to this, today I was reading MacroMates’s TextMate documentation and ran across this clear passage on the philosophies of TextMate:

From UNIX we get that Tasks and Trends Change. In concrete terms this means that instead of writing a command (in UNIX) to solve the problem at hand, we find the underlying pattern, write a command to solve problems of that type and then use that command in a script.

Connecting O’Reilly’s post to the TextMate/Unix philosophy, we see that Twitter, by design or by accident, solves problems corresponding to an underlying pattern encompassing user-extensibility, fast evolution, web transcendentalism, and simplicity.

The evolution of StockTwits as a social investing medium at a time when the market is punishing investors demonstrates the value of the principles the utility supports.  StockTwits is a great Twitter hack, and it evolves quickly (e.g., after starting with ticker symbols prefaced with dollar signs, market updates get prefaced with double dollar signs; the filtering mechanisms inherent to Twitter eliminate the downsides of traditional first generation web-based stock discussion media).

If I had to describe Twitter, it would be “like useful ESP”. Or maybe more accurately: “like ESP, but with useful filters.”

Postscript: I’m on StockTwits as firebones…

It’s taken awhile. I’ve sort of “gotten” Twitter for awhile, but never really participated in any significant way. Tonight, I started getting into it a little more, taking a little more time to explore. I mean, there’s been enough whining by Winer, of all people, that you have to realize there’s some fundamental value there even if you don’t see it. Even if there is no business model, the core use case will get baked into the stack.

<long historical exploration of being considered out of it deleted due to excess of maudlin reminiscing about abusing online systems in a Twitter-like fashion twenty years ago>

Short version: Twitter is simply distilled Facebook on meth. It’s all about “following the people who you follow follow”. It’s like a time-machine into the blog posts of tomorrow, a drink from the firehose for those who can’t wait. Walk the chain of people who people whose memes you find essential to see whose memes they find essential.

Giles Bowkett says the firehose needs a filter to keep the piss out of your personal stream (a.k.a., the Tim Bray effect). I’m not that tuned in yet. It’s easy to initially weed out who to ignore, but harder to weed out who those you still follow care to follow that you wish to ignore.

If you think it’s simply social, maybe it is simply social for you. But it’s the collaborative potential that makes it sticky. On-the-fly collaborative neural rewiring. Short of communal telepathy, or ESP-inducing crack, I don’t see how you outflank this.