Here at TIP blog, I am continuously talking about a methodological and sensible long term investments (as opposed to speculative stock picking games). Therefore, readers will find it unusual and surprising that I am discussing about my limited experience with a stock picking website. While its still true that I am not a trader, I am always experimenting (1) to keep my self aware of what’s happening around me; (2) with my own strategy against others; and (3) learn what not to do.
Today, I am going to discuss one of my most recent experiences with online stock picking platform or online social networking community. Last few days I have been participating and experimenting with moneyvidya.com (MV) website. Instead of watching passively from outside, I spent last few days playing around with its interface/capability and tried to figure out some of the key nuances. In order to avoid any personal bias, I will restrain myself from commenting on the stock picking per se. I will focus my comments only on (1) user experience; and (2) MV platform with reference to user’s quest for financial resource base, which includes quality of financial commentary and discussion.
MV is a recent Indian start up which is attempting to provide a platform to marry dummy stock picking with web-based social networking community. It is an online platform where users can pick stocks, elaborate or discuss strategies, rate fellow members, create polls, and write about their thoughts. At the back-end, the platform then uses proprietary algorithm(s) to rank the credibility and performance of individual members.
My quick initial observations:
- In absolute terms with reference to the fundamental concept, MV is not a unique one or alone in this market space. Users have other choices like moneycontrol.com, markethero.in, and stockezy.com. Other’s such as rediff’s, economictimes’, etc., are not really based on social networking.
- The uniqueness about MV is that it is making a concerted effort to position itself as a serious player when it comes to the process of general stock picking. This is where I believe it is attempting to differentiate from other sites.
- MV’s front end esthetics and user interface is top notch. The front end interface provides a very good experience with its simple page layout, ease of navigation, good presentation, and intuitive interaction. MV’s front end user interface is analogous to what iPhone’s UI is to other smart phones.
- A very simple and quick signup process, which is perhaps a tad better than other sites.
Now let’s look at some of the observations from user’s viewpoint that goes against its desire to be a serious player.
- I believe the aspect where MV falls short is its ability to provide any tangible or intangible benefit to its users. While it does seem that MV is making progress in the right direction, I do not feel it at a point where it can demonstrate itself as a serious player or a serious contender in this space. So far MV is more appealing to speculators and younger demographics. This is not a critical mass which will facilitate MV’s long term sustainable growth. This mass will provide a short term traffic volume on its website. The quality of its contribution will always remain a question mark. If this continues as is, sensible users will not come back again and again.
- I believe there are quite a few gaps in its existing ranking approach or methodology. Most of the users that are ranked on top percentile (or percentage) have made very few picks. In many cases, it is less than 10 picks, or even just one or two picks. e.g. there was one user who consistently for 5 to 7 days was ranked as top performer with only one pick! This is a significant dent to this quest for being a serious player.
- MV’s rankings seem to generalize or club together all investment methodologies such as low risk, moderate risk, high risk, short term, long term, etc. I think that any such online platform should be that able to differentiate between speculator and investor. At a minimum, classify ranking on categorical basis.
- MV’s stock picking platform encourages speculation to such an extent that it only looks at standalone picks, devoid of any associated amount. Now that’s not a realistic scenario. Users can pick Rs. 5 stock, which if jumps to 6 (i.e. 20% return and Rs. 1 gain) are ranked higher. But another user with Rs. 500 stock, which if jumps to Rs 525 (i.e. 5%return and Rs.25 gain) is ranked way down. Devoid of any fact that perhaps Rs. 25 may be a better profit than Rs. 1. I think any stock pick should be accompanied by number of shares component to get the total amount involved.
- MV’s ranking systems also seems to be devoid of transaction taxes, capital gains / loss taxes, dividends etc. I find it hard to believe that these taxes will not have any impact on total returns in frequent trading or picking scenario.
As an investment community user, I would like to see following:
- A core team of seasoned experts and/or core team of serious bloggers from different backgrounds and perspectives to provide quality insights. Let them contribute or moderate the MV blog or provide market commentary (not speculative thoughts). If not full-time, then part time one article or one post per week from each is a good start. Incentivize them by including them or their work in MV’s promotional program.
- In addition to core team, invite other good quality amateur writers or financial commentators. Incentive them by providing a mass platform like MV. Allow republication of their good quality post. Again, screen out generic speculative articles devoid of serious facts (e.g. one paragraph ramblings with two or three actual data points).
- Incentivize users for more involvement. Encourage and motivate users by ratings such as category or consistency based user performance rating, user involvement rating, rate user’s contribution to MVs community, etc. Recognize top performances in some form. While MV does have similar programs, it needs to be improved to facilitate more user involvement.
- Rationalize the rating methodology. Identify a minimum criteria before including users in the rating population.
- Value add MV website by providing more data-centric analytical ability. When a user comes on MV, he/she should have tools available within MV to look at the data (not just the pricing plots or few generic data points).
- I believe MV being a startup has made a good start, and it is perhaps moving in a good direction. It takes guts to start something this challenging. However, now it needs to be gutsy in showing quality of its content and quality of its platform. To become a serious contender and have sustainable growth, it needs to demonstrate the characteristics associated with a competitive player. It needs to iron out kinks in its armor.
- In an intermediate term, I will continue to be an active user of MV because I believe it has potential and it meets my current objective. Whether I continue to be an active user, will depends upon how MV’s content evolves over time.
- At a minimum, it provides me another platform to experiment and benchmark my process with fellow users. I can at least compare my strategy with other users albeit on a different ranking scale.
Disclaimer: All of the above observations, comments, and suggestions are strictly from the viewpoint of the user experience and user’s quest for financial resource base. These observations should not be interpreted as a review of the MV’s business model, not a critic of MV’s business objectives, and certainly not a critic of MV’s social networking based stock picking subject.
moneyvidya, stock picking