Wikinvest

Parker Conrad and Michael Sha launched Wikinvest in 2006 to gather user-generated security analysis. The project collates wiki profiles on investment concepts, fundamental analysis of companies and technical analysis of market price movements. It also appeals to MBA students with sections on personal investing, investment concepts and funds management. Conrad and Sha have graduated from Harvard dorm day traders to Web 2.0 knowledge entrepreneurs.

Claire Cain Miller’s New York Times profile makes the obligatory link with Wikipedia, the online encyclopedia. Conrad and Sha go into some detail of their verification process for data and public sources. Actually, the wiki has some specific applications for the pooling or crowdsourcing of investor insights. Sell-side analysts in the research departments of investment banks can have dual allegiances if the underwriting departments incentivise their research products to drive sales revenues. The best will gravitate to portfolio managers, dynamic asset allocation and hedge funds that use event/risk arbitrage and short-sell strategies. An investor wiki could provide a counterbalance to these influences through a broader snapshot of investor sentiment, and strategies to delimit analyst biases and groupthink. A side-effect however is that investor views are more likely to converge to a mean, and the market efficiencies may thwart value investing strategies that require information asymmetries.

In fact, the Wikipedia analogy has some limitations because analysts, traders and portfolio managers all structure and use market information in different ways to online encyclopedias. This was one of wiki creator Ward Cunningham‘s insights when he devised the Portland Patterns Repository in 1995: the value of a repository to capture domain knowledge and processes, and to codify them from tacit to explicit form using a methodology such as design patterns or object oriented programming structures. If it stays within Wikimedia’s online encyclopedia model then Wikinvest will be suited to fundamental analysis and introductory investing topics. However, it could evolve into a different form if it adopts insights from behavioural finance and tactical asset allocation into the wiki process. These areas augment Cunningham’s original schema with strategies to deal explicitly with how information quality and source selection can affect investor decisions, judgment and verification. Even these vary depending on the end-user, their self-awareness, the intended contexts of use, and what potential outcomes may occur (a normative stance on the superiority of user-generated content over ‘traditional’ media is not sufficient alone to address the concerns that these processes are meant to anticipate and solve). The pressure to change and evolve may come from sell-side brokerages which now use Wikinvest as a cost-efficient data source for market commentaries. Alternatively, it may come from Wikinvest’s end-users as the wiki gains more public prominence, and attracts a range of investor styles with knowledge of asset classes, inter-market volatilities and global dynamics. If this occurs then Wikinvest and other wikis could have a pivotal role in the democratisation of finance beyond London, New York and Chicago.

Just don’t be surprised if Icahn Reports maven Carl Icahn (video) launches a wiki raid.

NIN’s HD Lights In The Sky Tour Footage

Trent Reznor has released 404gb of raw, unedited HD tour footage from three shows on Nine Inch Nails‘ 2008 Lights In The Sky tour.  The footage is available as a peer-to-peer BitTorrent file.

An interesting pattern emerges about the reasons for Reznor’s BitTorrent tactics and Christmas gifts to fans.  Several weeks ago Reznor indicated to fans that an official DVD project for the tour had fallen through after a negotiation breakdown with a production company.  Whilst researching this 2008 conference paper and presentation I found out that Reznor knew in December 2006 about the Pirate Bay leak of NIN’s unreleased Closure DVD (Halo 12), a project still held up by licensing negotiations.

As I suggested in the paper, Reznor is using BitTorrent hyperdistribution to side-step negotiation breakdowns.  You can visualise the backward induction of decision tree payoffs or the real options analysis.  It’s a win-win situation for Reznor and NIN’s fans: Reznor breaks the deadlock and releases ‘unreleasable’ projects which probably have significant, unrecoverable sunk costs.  Fans get the raw, unedited material for user-generated content.  Behind this strategic rationale is a positive feedback loop that keeps NIN and Reznor relevant, generates buzz marketing and media coverage, and enhances Reznor’s bargaining power in negotiations.  The losers in this reshaped value net are the traditional record companies, their retail distributors and music industry lawyers.