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Investors and Google Buzz: a threat to StockTwits?

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With much fanfare yesterday (they even arranged a blizzard for much of the googlebuzzU.S.), Google announced its social media offering, Google Buzz (see video below).

What is Google Buzz

So, what is Buzz?  I like Matthew Ingram’s description on GigaOm of the Google Buzz service:

Google’s new service looks and feels a lot like many other social media tools and networks. The primary input is a box for status updates, just like Twitter and Facebook. You can use @ replies, just like Twitter, and you can share photos and other media content easily (there’s even a photo gallery function like Facebook’s). If you’re mobile, you can give Google Buzz your current location and get comments about that location, just like Foursquare and Gowalla and Yelp. But the single biggest difference between Google Buzz and all of these other services is that Buzz is tied to email.

I think what’s interesting here is that it looks like a take on Twitter and Facebook that will allow more intellectual collaboration.  And by that, I mean an ongoing, multimedia, conversation centered around specific content.

How Investors use Social Media

Beyond the back-and-forth whether Google Buzz is a big hit or flop, I began thinking how investors could use this service. When I do this (it’s a messy process, sorry), I tend to use the New Rules of Investing framework.  Investors using social media tend to piggyback gurus (cloning super investors’ portfolios a la AlphaClone), crowdsource ideas (like Piqqem), participate in expert communities (like Covestor and kaChing), and use new technologies to better screen for investments.

StockTwits: What it does

We all know of the initial successes of StockTwits — it’s a good service, run by competent, thoughtful people and has created a pretty loyal (can I say, rabid?) following of users.  Built on Twitter, StockTwits layers in functionality specific to traders and investors (they’ve even skinned their own Twitter software client).

StockTwits users are plugging into what I call (in my upcoming book) the Tradestream: online investors’ publicly available trading logs, complete with their thoughts and theses behind the trades and market conditions.  These are short thoughts, 140 characters or less in length, and typically stand alone.  It’s hard for someone participating in a conversation — let alone, someone who is merely a spectator of one — to group together thoughts into a cohesive conversation (think of how Gmail deals with emails/chats as part of a discussion).

How Google Buzz improves on Twitter/StockTwits

Google Buzz changes this.  Buzz groups thoughts, however errant or short, together into an ongoing discussion.  For example, assume someone posted their thesis on whether Google (GOOG) is a long or short candidate.  In yesterday’s pre-buzz world, an investors would use StockTwits’ Twitter client and post, “Thinking Google’s a long here.  Any thoughts?”.  This would be followed by a string of responses over the next few minutes and trickling in over the next couple of hours.  To view this unfurling chat, users could check the StockTwits Google Page online or access this data through a Twitter client.

But, and here’s the thing, there is nothing cohesive pulling these scattered thoughts into a conversation to help me make a decision regarding GOOG.  Of course, I can scan the output — the tradestream — and piece it together myself.  The power of the conversation is lost on Twitter and instead turns the stock research process into an incessant deluge of sound bites. That process of vetting ideas is especially important to investors.  This is not a ding on StockTwits as much as its the product of how Twitter works.

Google Buzz changes this.  And more, it inserts the tradestream into my email client, where I’m already spending my time — not a game changer, it just enables me to close one more window.

Is this something StockTwits can address?  Surely.  Howard Lindzon and team understand what investors/traders are looking for and are rolling out tons of functionality (have you seen StockTwits TV?  Loving it, actually).  It’s this focus on the investor/trader/analyst that will continue to trump Google’s more general efforts in this space.

Thoughts?

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