When I started my hedge fund in 1998, I loved getting thick equity research reports. It felt like I was in the know because I could get anything.
But, paper would stack high and it was all pretty much useless. We had the Asian contagion followed by stocks like AtHome that traded on cute metrics the analysts were making up daily.
‘Hot or Not’ was a better tool for equity research.
Today, analysts are leaving the banks in droves. This is not inside information, or a new trend, just one that is accelerating. Finally.
Michael Bergen, a hedge fund manager, mentioned this in my stream the other day:
$JEF Jefferies dropping research coverage of 40 companies as 4 analysts have “left the firm”. Dropped names include $PEP $MGM $KMB $CLX $ADM
— Mike Bergen (@BergenCapital) December 23, 2011
I am not sure whether these analysts really created any efficiency, but assuming they did, you can see the new void. It won’t be filled with banks and ‘chinese walls’ anymore.
Forgetting every valuation metric we argue over for Linkedin $LNKD, Twitter, Amazon $AMZN, Facebook and Stocktwits, the ‘people network’ of the web outside the wall of the brokers and Bloomberg are good enough for 99 plus percent of equity investors to trounce the markets. I can’t comment on the bond markets because I have zero experience on either side so hopefully others can chime in in the comments.
Great investors/traders will use all these tools to find ideas and manage positions and great analysts will get discovered and paid by sharing their research and ideas across these platforms. Take a look at Rob Peck and Dan Ramsden the founders of Co-Rise. You won’t find better qualified media analysts or bankers. They can use Stocktwits in a compliant way to share ideas, market themselves, build an audience and network.
Today, ‘retail’ traders can create algos on their own using programs like Trade Ideas, the PPT from TheFLY and/or FusionIQ to name a few. You can trade Forex 24/7/365 using overseas brokerages like Etoro.com (I am an investor).
It has been our goal at Stocktwits to build the communications platform where all these people and all these products can find each other. You can follow people, tickers, sectors or a mix of them all. There is the growing ‘suggested‘ stream which is the best mentoring product I have ever come across for learning the language of the markets.
I can’t believe it has been three years since we started. I am excited for year 4 because we have a focused team, a more finely tuned product, the capital and the community to ramp things up.
Its very difficult to find intelligent fundamental analysis and discussion online, especially about the less sexy companies. It would fill a great void if StockTwits were somehow able to encourage this.
Its very difficult to find intelligent fundamental analysis and discussion online, especially about the less sexy companies. It would fill a great void if StockTwits were somehow able to encourage this.
Its very difficult to find intelligent fundamental analysis and discussion online, especially about the less sexy companies. It would fill a great void if StockTwits were somehow able to encourage this.
we do, but you need to take leadership…the tech and product will catch up to those that lead…ping me howard at lindzon dot com if you have suggestions …
I’m a CFA candidate but have often wondered what’s the point of fundamental analysis for stock picking? The price discovery happens faster than the analysis can get be done, prices are so correlated to the broad moves, what value can digging into the past add? I realize (and hope) it’s more complicated than that and good analysis is useful and value adding but for my own trading, it’s pointless unless I limit my possible targets to a handful of companies I follow.
Hi Chris – the CFA is either way an amazing feat so good luck.
The value, technical question is as impossible to answer as god. I think its OK to have faith in one or both, just not blind religion.
I agree on a handful of great ideas that you can only follow the key is pruning and a routine that allows new ideas through the wall to be thought about….that’s why I use all-time highs as a filter…its the fastest way to recognize great companies that are emerging with price.
A couple of comments, equity research analysts have the ears of c-level executives. having a thesis based on historical data and channel checks is a lot of work which I believe the ‘social cloud’ (is that trademarked yet) can help solve. But having the ability to talk with executives will not be replaced, so how does one solve that dilemma?
With respect to fixed income, there actually could be a better product out there from the social cloud than for equities. It wouldn’t be stocktwits, but bondtwits? Not sure about the branding, but you could put the rating agencies out of business! If interested we can talk more in detail.
the bond market is too big for social to tame :)
you think so? i’m thinking of the muni bond market specifically. what better data feed than local tweets to give you a gauge on how the municipality is doing. or aggregate data from various sources on supply/demand of housing, employment, permits, etc. to get a social score of the muni bond than s&p or meredith whitney
The other benefit – I hope – of the change you describe in the analysts’ platform is that executives may be given (or take) a greater opportunity to take a longer-term view. Short-termism comes from fear of reprisal – even when the long-term outlook is good. This is bad for business and bad for the economy.
I’m a great fan of Stocktwits, not just for my own purposes but also to help the executives and business owners I advise to better understand the way that markets and their players think and operate. Thanks for a great 3 years. I’m looking forward to Year 4.
Thanks Leslie – we will do a better job in year four surfacing longer form contect and research and organizing the way people see what they want to see about tickers.
EVERY CEO should have a long-term view and the easiest way to help them and ensure they do is to have the markets open monthly or at least just weekly. Unfortuneately that is not going to happen so the great CEO’s will look like goats for most of their lives…
analysts lost cred a loong time ago… the market is a different animal now..nansecond algos and bots rule….fundies? gimme a break!
Ultra low frequency market, that would be interesting. Could even try discrete intervals within a day to slow things down.
The public markets are a strange lens for estimating real time business value, more so with derivatives. It’s like a bunch of kids swapping baseball cards with reckless abandon. Do trades ever reflect more than some noise about a historical market trend? At least they demand transparency withing business.
Problem with the bond market is it’s too opaque to tame. There are regulatory and distributive hurdles in place that keep the game the same. It inflates profits for the Wall St firms, and keeps competition out.
How fast can you get a quote on a listed stock or US Treasury? Try doing that with any bond, muni or corporate.
If you set up a platform to compete, they regulate and litigate you out of the way.
yes pick your battles….
I have passed CFA L2 and looking for analyst job but now confused about what to do because many are calling Research Analyst a dying field due to changing landscape of how commission be handled in the future.
can you please recommend which field to start my career with?
Thanks