Crowdsourcing stocks, Piqqem adds missing link for investors

2009 saw crowdsourcing — as a movement — making big strides in practice and PR in a variety of different fields.  For investors looking to purely crowdsource stock ideas, Piqqem has been on the forefront of helping investors tap the wisdom of the crowds.

Having users rate stocks on a variety of different factors — much like The Motley Fool’s CAPS program — Piqqem has been producing sentiment indicators for thousands of stocks over the past couple of years.

I’ve written about Piqqem rather favorably in the past.  Here is a short interview I had with them in late 2008 and here’s a recent BusinessWeek article about crowdsourcing in general in which I was quoted.

My stance had always been that while what Piqqem was doing was cool — literally, getting crowdsourced ratings on a slew of stocks — it was never clear that this was actionable information.  Meaning, can an investor make sense in a change in sentiment towards Apple (AAPL) leading into an earnings period?

Investors looking to utilize this information should be a lot happier after Piqqem’s launch yesterday its new Sentiment Trading Simulator.  In short, the trading simulator allows investors to create rules (buy when sentiment rises above 50, sell when it sinks below) and back test them on stock performance.  This is absolutely the missing link needed to help make crowdsourcing stocks more widely accepted.

With the simulator in hand, investors can attempt, via trial and error, to create certain strategies that work for them.  The tool was just launched and as such, is relatively crude.  I expect that the startup will continue to hone the tool.

Right now, the tool allows users to:

  • Create new strategies
    • by creating buy and sell rules pegged to Piqqem’s sentiment ratings
  • Rub a simulation of those rules
    • on single stocks or multiple stocks
    • over different time periods (bull/bear markets)

Users can see how their rules fared over specific time periods and tweak timing, rules, and stocks analyzed to optimize strategies.  When I say the tool is somewhat rudimentary, I mean that outside of hitting correctly via trial-and-error, I’d like to see the system help with identifying optimal strategies.  In fact, I’d bet people would be willing to spend something to access these rules.

I think this launch is a huge step in bringing crowdsourcing to the broad investor community.  I’m interested in hearing what you think.  Let me know in the comments below.