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If software could do anything to help you invest, what would it be?


JAllen
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Extrapolate search trends, twitter and forum postings to gain an idea of when maximum pessimism is occurring in an individual and use that to advantageously locate bargains in the market.

 

Check out google trends:

 

http://www.google.com/trends/explore#q=fiat

 

Click the forecast button for quantitatively based forecasts.

 

Unfortunately, the y-axis has no absolute value, but is purely relative.  The tool is still useful though.

 

For twitter, et al. there are similar tools.  I don't know what they are offhand though.

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If software could do anything to help you invest, what would it do?

 

Be relied upon by other people, and stay out of my way. 

 

I feel the same way about technical analysis.  As long as I know that other people are using it I gain an inherent advantage by using my temperament. 

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I've come to the conclusion that information is freely available, or available easily.  We are flooded with information, but we struggle to make decisions.  What investors want isn't information (morningstar, yahoo finance, capiq, bloomberg) but rather decisions.  That's why this board exists, that's why research firms exist, that's why newsletters exist.

 

The market for finished investment ideas is huge.  Most people want the finished idea rather than the information that will lead them to the result.

 

So what type of software should be created?  Something that fulfills this.  For example there are sites that list screen results of net-nets.  But what doesn't exist is a list of net-nets with a blurb saying why you should invest in some and avoid others.  Some of this can be done programatically, but a lot requires human analysis and intelligence.

 

I like giving away free ideas.  I bet this would be a hit.  Scrape sites like this, Motley Food, Seeking Alpha, Yahoo, VIC, anywhere with discussions and tickers.  Then parse the responses to generate a sentiment analysis to gauge popularity for an idea.  Combine that with fundamentals and provide a finished 'answer' to users.

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I would love software that would send a text message to my phone when a stock hits a certain price. It will also send some basic information like ebitda FCF, EV and the note I possibly made about the stock. That way you could make a watch list of like 500 stocks you barely understand and looked remotely interesting and always pounce whenever some great mispricing occurs without constantly having to check my google docs and browse through 500 names.

 

I think over the years you could build up quite the list and gain some basic knowledge on each one.

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I would want 10-year data on OTC stocks, Scandinavian stocks, Australasian stocks, African stocks and everywhere-else stocks.

BVPS, P/B, ROE, ROA, FCF/share, shares outstanding and so on in an easily readable and manipulable format.

 

The problem then becomes that once you've come up with it anyone can steal and post it themselves, but if you do add value with commentary and insight into the companies and their management then that would be somewhere you could grow a worthwhile international brand where no good ones currently exist.

Basically, it would be like ValueLine, Morningstar or Gurufocus, except covering small North American, foreign stocks and all the other ones they don't focus on.

 

I think that could be really interesting with markets like India, South Africa and all the others out there.

 

 

 

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Someone still has too make the decision.  I am fine with everyone else out there letting their software think for them and in many cases trade for them.  Everyone is looking for the tech edge.  Very few work the fringes and actually ignore the flow.  Perversely, this has made the markets strangely more inefficient.  Mispricings happen very rapidly.  Every time this topic comes up I think of the 'Whale Incident'.  This was front page business news.  No one needed software to see an awesome buying opportunity. 

 

As Oddball says we are bombarded by information.  The real skills lie elsewhere.  The same old same old... Buffett makes a bucket of money based on his ability to shut the flow of info and quietly make decisions.

 

Sorry JAllen, I am not being very helpful.  Thats what you get for allowing a non-tech, non-engineer, non Business degree dude freely post here.....

 

 

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Yeap, although I am a little younger than some people on this board (25) there really isn't much that is not available already.  The key is to not let the software/information flow corrupt your decision making process.  I think in a recent interview Guy Spier (noted value investor) mentioned that he has a quiet room in his office where no electronics or the like is allowed.  My point is that people already use software and media to effectively create a huge advantage for others who can sit on their laurels and wait for the right pitch.

 

 

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You need to have a lot of models to process information. Like in Munger's speech he mentions a bunch. I dont mean models as in complicated math formula's and numbers. The one who has more correct models, and has a better intuitive understanding of them, processes the information better. That is why munger advocates learning basics of fields like psychology and physics. A lot of these observations in nature happen on our level too.

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Funny, I just finished reading a thread over at HN: https://news.ycombinator.com/item?id=8503861

At least 3 different websites mentioned there that I've never heard of before: dough.com tastytrade.com and capp.io

Seems like a lot of people are trying to come up with various new ways of "monetizing" the retail investor.

 

Read the same thread.  Here's what's funny, retail investors don't pay, institutions do.  Yet all of these startups are targeting retail investors.  It's a lot easier to get one hedge fund to pay a few grand a year verses a retail investor to pay $30/mo.

 

Big companies pay big money without even blinking an eye.  I was in a meeting about eight months ago where the Director I was meeting with received a phone call.  He looked at the caller ID and ignored it.  Then complained to me it was a sales guy trying to get a "tiny" $500k deal signed.  To this Director $500k wasn't even worth picking up the phone for, yet to anyone in the real world that's significant money.  It was interesting to say the least.  This isn't the only example of this I've come across.

 

Here's my advice, forget retail investors and target institutions and funds.  Figure out exactly what they want and give it to them, they are willing to pay.

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Here's my advice, forget retail investors and target institutions and funds.  Figure out exactly what they want and give it to them, they are willing to pay.

Most valuable comment in this thread so far. If you can figure out how to give institutional investors something they don't have already, that can make a difference in their performance, you have potential for at least a solid small business. Probably one that you can sell to a larger player once you have established a client base.

People did it for different types of SEC filings (ie. insiders, holders, extracting/scraping financial data, governance), bank/insurance/utility regulatory filings, bankruptcy court filings etc. Heck, people sell mall traffic data and oil tank storage readings. If you find a source of valuable information others are not aware of - or you if you find a better way of presenting/analyzing the existing data - you have a fighting chance to build a business.

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Here's my advice, forget retail investors and target institutions and funds.  Figure out exactly what they want and give it to them, they are willing to pay.

Most valuable comment in this thread so far. If you can figure out how to give institutional investors something they don't have already, that can make a difference in their performance, you have potential for at least a solid small business. Probably one that you can sell to a larger player once you have established a client base.

People did it for different types of SEC filings (ie. insiders, holders, extracting/scraping financial data, governance), bank/insurance/utility regulatory filings, bankruptcy court filings etc. Heck, people sell mall traffic data and oil tank storage readings. If you find a source of valuable information others are not aware of - or you if you find a better way of presenting/analyzing the existing data - you have a fighting chance to build a business.

 

One thing that selling to institutions brings with it, especially in the finance world, is a the huge barrier to entry that all of the regulation and security scrutiny brings. Selling to retail investors is something you can literally do tomorrow on some servers you bootstrapped with a personal credit card on amazon web services. You can't do this if Fidelity or Goldman is going to buy your product. An additional difficulty with selling to institutions is the extremely long sales cycle. I don't disagree that selling to institutions is a good idea, but I understand why there is focus on retail investors. It's just easier and less risky

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I want a rock solid xbrl browser/search tool that can enable me to do things like look at the last 10 years of management discussion and analysis or find every single spinoff in the last year. Currently I am playing around with finmodeling on ruby but I can't even manage to install the thing because it has some funky dependencies.

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