New portfolio analytics tool, PortfolioRunner, is readying to leave its beta testing and formally launch. Well, it’s actually more than an analytics tool. Portfolio Runner does 3 things:
makes stock recommendations: using a variety of technical, fundamental and crowdsourcing algorithms, PR suggest additions stocks to buy/sell
risk management: PR helps investors determine size of individual positions and suggests an exit strategy for each position
news analysis: PR makes it easy for investors to follow breaking news on the fly, determining whether the news is positive or negative for the stock, and extracting relevant info.
Check it out and let us know what you think of it in the comments below.
Investors have made money for decades by borrowing in one currency with a low interest rate and exchanging it into a higher interest rate currency. Called the carry trade, it made a lot of people of lot of money.
Simply put (kinda), thes FVAs attempt to predict future volatility in a certain currency. More specifically, the FVA sets a forward implied volatility by making a guess about future spot implied volatility. These guesses tend to be wildly off:
Forward volatility is a poor predictor of future spot implied volatility
So, if forward vol is a bad predictor of future vol, investors can design strategies to take advantages of this.
For example, buying (selling) FVAs when forward implied volatility is lower (higher) than current spot implied volatility will consistently generate excess returns over time.
Interesting idea — as for me, I’ll stick with momo stocks like $AAPL and $PCLN but this sounds like a promising strategy for forex traders.
Source
Della Corte, P, L Sarno, and I Tsiakas (2010), “Spot and Forward Volatility in Foreign Exchange”, Journal of Financial Economics, forthcoming. Centre for Economic Policy Research Discussion Paper 7893.
A wealth of information creates a poverty of attention
Smart investors avail themselves of all valuable resources as inputs into the investment research process. I write about this faculty in my book Tradestream in the chapter “Co-lateral Research“. What co-lateral research means is all the non-financial/non-traditional sources of information that can be used by investors to connect-the-dots.
Among our sample of Russell 3000 stocks, stocks that experienced an increase in ASVI [me: abnormal search volume index reading] this week are associated with an outperformance of more than30 basis points (bps) on a characteristic-adjusted basis during the subsequent two weeks. This initial positive price pressure is almost completely reversed by the end of the year.
The paper also finds that increased search volume leading up to hot IPOs may be responsible for that big first-day pop! that such issues experience.
As the first paper that has really looked at search data from an investing standpoint, this should be piped and smoked. In fact, the authors conclude the paper with a somewhat foretelling statement:
Search volume is an objective way to reveal and quantify the interests of investors and therefore should have many other potential applications in fi nance. We leave those for future research.
Wealthfront announced the addition of 3 new investment advisors on their investment platform.
As per the firm:
Towle & Co.(Value Strategy | Min. Outside Wealthfront: $500,000)
Towle specializes in a long-term, deep-value investment strategy that seeks to uncover significant discrepancies between stock market prices and underlying company values. Through Towle, you can invest in well-run companies with strong market positions and low price-to-sales ratios: a way to buy operating leverage and economic activity on the cheap!
Barton Investment Management(Growth Strategy | Min. Outside Wealthfront: $1,000,000)
Barton believes the market fails to appreciate and correctly value the full potential of enterprises that create new markets. Its concentrated portfolio of carefully-selected younger growth company stocks allows investors to capitalize on these market inefficiencies while supporting innovation.
CWC Advisors(Small Cap Strategy | Min. Outside Wealthfront: $1,000,000)
CWC began providing investment services in 2000 to high net worth individuals, and within a few years, attracted the interest of institutional investors. Its strategy consists primarily of contrarian U.S. companies with recent price under performance, corporate liquidity and/or fundamental valuations at historically low levels. Now you can invest with CWC, too.
Worldcrops.com just launched. Headed by former Financial Times commodities editor Gary Mead, there’s more here than just commodity data porn. Worldcrops.com is an offshoot of the VM Group, a UK-based advisory group focused on research and analysis of precious and base metals, energy, agribusiness, and renewables.
The site provides two differing levels of subscription — one (free) that gives access to raw data, news while the premium version provides a layer of analysis on top.
Technology continues to run riot over a variety of industries. Nowhere has that been felt as acutely as in the music industry. Apple’s ($AAPL) iTunes may have changed the distribution model (selling over $1B in the last financial quarter alone), basically unbundling CDs and selling individual songs a la carte.
Music, it is a changin’
But the migration from analog to digital has been accompanied by a much more profound change — the revenue model of the music industry is undergoing a transformation. Where the model was previously selling musical media (artists generally made lots of loot by selling records/tapes/CDs), the model is changing to charging for music experiences (see my recent piece on the business of Broadway and concerts).
Artists embracing this change have shifted their model to almost giving away music (or charging fans whatever they want to pay) in order to capture some funds at the next concert.
Fast Company has a very interesting rundown on Girl Talk, a biomedical-engineer-turned-DJ who makes music by mashing up others’ tunes. Simply, he takes hundreds of samples of music and weaves them together, creating cool sounds but even more enjoyable live shows. He’s putting butts in the seats because he’s providing great live value.
IPOs, Social Media and the Era of the Mashup
We’ve all read how Facebook, Twitter, and LinkedIn are gearing up to go public sometime soon. While these services seem novel, in essence, they’re all just mashups of technologies and platforms that existed before Zuck entered his first frat party (not to sound snobby, but there aren’t frats at Harvard).
Startups and traditional companies are making lots of money just copying Groupon’s model of group discount buying. Travelzoo , a decidedly Internet 1.0 company, has a Groupon-like clone that offers expiring travel deals to its email list of over 20m and that 4-month old business is rumored to be valued at $400M. Abe’s Market, an Etsy-like green marketplace founded by my friend, Richard Demb, is experimenting with live selling online with its Abe’s Live, combining the breadth of vendor-driven supply and the entertainment value of a QVC.
The future of business is the mashup. Those companies who can climb to the top of the value pyramid — by leveraging and riffing on the work done on by those along the way — will win and that’s where investors should be looking to place their bets, IPO or not.
Voyeurism drives a lot of our activities online. Admit it — you’ve definitely googled or facebooked an old friend with no intention of reconnecting. You just wanted to peer into their lifestream.
Venture Capitalist Michael Eisenberg told me once that many of today’s successful online businesses are winners because they incorporate some level of voyeurism.
If investing is about learning, we’re always interested in what others are doing, but sometimes it’s hard to figure out. To see what a large asset manager is doing, we can check public portfolio filings. Other times, we pick up what others are investing in over a game of pickup basketball.
Regardless of how we get this information, we place a value on it (sometimes, even a value greater than our own opinions). The collective tradestream (and dissemination tools like StockTwits and SeekingAlpha) allows us to drop in on the investing party our friends are having — at any time. Not only can we get ringside seats into smart investors’ every activities, but we get their rationales for doing so.
It’s pure learning — both cognitive and the emotion set behind the trade.
This week’s podcast contains a great conversation with Evan Sparks of Recorded Future on this week’s Tradestreaming Radio.
Evan and Recorded Future are working to bring analysis of social media chatter to a whole ‘nother level. Combining sophisticated linguistical analysis and a solid background in devising investment strategies (Evan worked as a quantitative equity analyst previously), Recorded Future’s platform scans over online sentiment and predicts when specific events should occur in the future.
For example, if I’m sizing up making an investment in Amazon.com ($AMZN) and I know they’re looking to go toe-t0-toe with Netflix’s ($NFLX) DVD rental offering, I could use Recorded Future to handicap the likelihood that $AMZN makes an acquisition in the space and when the Internet expects this to occur (Amazon announced the purchase of a European competitor, LoveFilm, yesterday). Retail investors and institutional money managers are turning to Recorded Future to help them tap the inherent potential value in all the content in the blogosphere.
Check out the podcast below (or if you don’t see it, here). If you use iTunes, our program can be found here. We’ve also made available all our radio archives, as well.
After Tradestream was published in hardcover (affiliate link), I’ve received a lot of requests for a version compatible for the Kindle. After all, the book is about leveraging social media to become better investors — why shouldn’t it be available in digital format?
Oh, also, cool what you did to the “supposed” adult supervision afforded by (well, ex-) CEO Eric Schmidt. It’s pretty sick how Larry just wrested control away from him and sidelined him to take back the company. I’d give all my 24 hr access to fruitloops on the Googleplex to see the look on his face when you dropped that bomb on him.
For me, it didn’t really rock my world. From the word on the Street (or at least on campus here), he never really had any control anyway. Like when you guys bought Android and didn’t even tell him. That was awesome.
Eric may of had to go — I mean, with over 90% search dominance in so many markets, yet the inability to really monetize anything else and the makings of a Microsoft-type ($MSFT) European anti-trust inquisition mounting against the search firm, the company needed some fresh blood.
But this peep isn’t exactly sure that a return to its roots is what the firm needs. With the growth in the company over the past few years (23k f’in Googlers, baby!), we’re kinda all over the place. Add a lame attempt at buying Groupon — we need new leadership. I mean, the last thing we want is to pull a Yang or Ballmer and bring back the lifeblood of our startup days — our founders — to steer these ships that have certainly outgrown their own abilities to manage such large organizations.
Oops — is that what just happened? $YHOO’s Carol Bartz maybe-coulda-woulda been a better choice?? Maybe not.
overlayed on top of stock index charts. GDT 
