Category Archives: new products

SkyGrid: Case study on ad-supported investment media

Is the elusive “Bloomberg for the masses” attainable?  Of course, most do-it-yourself investors cannot afford the cost of thousands of dollars per month for these expensive terminals.  But, what about making a platform free for subscribers and monetizing the platform via advertising?

That’s exactly what SkyGrid is attempting.  Until recently, SkyGrid charged $6000 per seat/year for a flash interface that allows users to track financial news on stocks and sectors they’re interested in.  In April, the company, which raised $11M in April from top venture firms, transitioned away from a premium model to a completely free model.  SkyGrid has made free accounts available to New Rules of Investing readers.  If you’re interested, go here to sign up for a free account: http://www.skygrid.com/reg/?id=8x89a9e3

The Service

skygrid_home

SkyGrid users log in to their accounts over the web via their browsers.  Once in, users are greeted with the only human-arranged editorial component on the platform: the day’s top or breaking financial stories.

SkyGrid produces a user-defined customizable news-stream.  Users of the system can customize SkyGrid to continuously stream stories about stocks in their portfolios.  SkyGrid compiles this content based on what the company described as a complex, multi-step process that includes:

  • crawling/scraping data/headlines from feeds in real time
  • validating reputation (link structure, click volumes) to weed out only content appropriate for a high-end user, like a hedge fund manager
  • testing if the content is important/impactful  for investors (Steve Jobs = important for Apple),
  • applying sentiment indicators (green if the content is positive, red if it’s not) via semantic analysis developed by computational linguists (something the firm says is very different from keyword analysis)
  • real time clustering (grouping various articles around similar themes)

The upshot is that users get a vertical stream of  headlines which they can click through to read the entire article.

Pros:

  • The system works really quickly and it appears to be eerily on target with its content.
  • I found very few articles streaming by that weren’t interesting or important for shareholders.
  • I believe this comes from good science, programming, user interface and tying it all together, a focus on investors.  SkyGrid has developed this for investor use and investor use only and it shows.
  • It even follows Twitter streams where more and more investment content is being shared

Cons:

  • This may be another case of coming to a knife fight with a gun or a solution looking for a problem.  I found the amount of information hard to digest.  As an hedge fund analyst, I was paid to discover profitable investments.  Does actually having this amount of information make me better at that?  I’m not convinced.

Building News Streamsskygrid_portfolio

Because SkyGrid is a smart, content aggregator built with investors in mind (as opposed to some of their competitors that are merely trying to sell to investors), SkyGrid has some interesting functionality when it comes to customization of news streams.

  • Uploading tickers of portfolio: for institutional investors monitoring lots of stocks, the ability to upload a list of tickers makes it really easy to set up
  • Sector analysis: I like what SkyGrid has done here.  Instead of using old-hack sectoror industry number/jargon, SkyGrid allows investors to monitor sectors the way they think about investing in them.  So, no “information retrieval” for “web portals” or “hardware components” for “consumer electronics”.  This isn’t trivial and is quite useful.

Pros:

  • customizing a news stream is really easy on SkyGrid.
  • upload function is really helpful for professionals or retail investors monitoring a lot of positions
  • sector tools approach industry analysis the way investors do, not like the Dewey Decimal system does
  • Good filter system gives users ability to tune out blogs, mainstream media, news wires, etc.

Cons:

  • I’d like more help here with idea generation.  For many investors, they know exactly what they want to monitor.  Others need help.  Maybe pre-seeded news streams with commonly held stocks could help.  Or maybe seeing celebrity investors’ news streams could help prod users for ideas.  I think more work here will help many retail investors as well as professionals who are less web-savvy.
  • While the filtering provided allows investors to tune out certain types of sources, it would be more interesting to filter out specific sources.  Maybe I’m interested in TechCrunch.  Or maybe I’m not.  I’d like to be able to decide as I go to amplify or drown out certain sources.

Social components

There are a few important components built-in on SkyGrid that connects the platform to the greater whitespace of social networks:

  1. Each of the streaming headlines can be easily posted to social networks like Twitter, adding to the virality of the platform, though it’s unclear to me if there are any beneficial network effects for users by having additional users on the platform (it’s clearly good for SkyGrid’s marketing and distrubition).
  2. The customizable news-stream can be shared out with others, much in the way content aggregator, Alltop allows users to create my.alltop.com (see my.alltop.com/zackmiller, as an example)
  3. Users can rate that they like certain articles.  These articles are then tagged so users can revisit them.  At the aggregate level, there is even some rudimentary ranking of top favorited items.

Pros:

  • Basic sharing functionality outside of the SkyGrid platform onto social networks.

Cons:

  • There don’t seem to be any (easy to find, at least) internal social components.  I’d like more insight into others’ news streams.  That voyeurism works well for me and on the web in general.  We’re seeing portfolio peeking in expert investing communities, like Covestor.
  • analytics: I can’t put my finger on it exactly but there is probably some interesting stuff to be done here with meta information that would be useful for investors.  I’d like to see some data (ie., 76% of articles on Apple are normally positive, today shows only 25% — maybe the beginning of a turn in sentiment)

New Rules of Investing Overall Ratingraiders-sword_l

UsabilityPass +

SkyGrid does everything it purports to do.  It’s a great user experience to have an ongoing conversation stream of all the stocks and sectors in one’s portfolio. The filters are great — read only that content that’s pertinent to a shareholder.  The rest is just noise and SkyGrid tunes it out.

New Rules Meter:    Pass-

This is a level of how Web 2.0 the site actually is.  The site scrapes and analyzes content really well but doesn’t do a great job of sharing/producing content withing its own 4 walls.  Unlike Twitter, which combines both external content and commentary on top of it, SkyGrid seems a pretty static environment at this point.  Because we’re dealing with financial information, this could certainly be by design but it would be interesting to create some type of network effect, where users can also create content and share.

Needs Fulfillment: Questionable

It’s here that I struggle.  SkyGrid does what it does quite well.  I’m just not convinced anyone really NEEDS it.  Combine a chintzy Yahoo Finance with StockTwits and a good blog aggregator like Google Reader and how much do you really miss?  SkyGrid is another program that demands attention.  I like to keep a separate window open on a separate screen from where I’m looking just to let it scroll — much in the same way I use the Twitter client, TweetDeck.  I like it but just not sure how ultimately valuable this is.  It’s like half-listening into a conference call or letting CNBC play in the background.

That’s just me — what do you think?  What are your perspectives on SkyGrid?

I’m going to use a future post to delve into the business model — turning an institutional-grade investment platform into an ad-supported thin client.  Stay tuned.

SkyGrid has made free accounts available to New Rules of Investing readers.  If you’re interested, go here to sign up for a free account: http://www.skygrid.com/reg/?id=8x89a9e3

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E*Trade further blurs lines between full-service and DIY investing

Full(er) Service and DIY Investing: Investor Fork in the Road

There is no doubt we are witnessing a wholesale exodus of assets out of full-service brokers like Merrill Lynch and Smith Barney. These assets seem to be finding two very different types of homes:

  1. boutique investment advisory houses: Built by brokers/advisors who themselves have defected from the large wirehouses, these firms take service and advice very seriously. In some sense, they’re a further move into full-service. They are competing head-on with traditional brokerages by upping the ante on technology, service and investment advice.  Investors who feel slighted by their advisor and want the extra hand-holding find this model really attractive.  It’s interesting to note that many of these firms are being founded/built by traditional brokers evolving to this model.
  2. online brokerages: Firms like E*Trade and Ameritrade are taking the bulk of this business.  In the wake of the financial tsunami, some investors are looking to take back investment decisions and don’t want to pay someone else for underperformance.  Proof of this is in capital flowing to online brokerages.  E*Trade reported that it had net new accounts of almost 30,000 in the first quarter of 2009 with $3.5 billion in net new customer assets.

I’ve written about the emergent trend towards high end investment advisors and how traditional stock brokers are resurrecting themselves and building smaller, nimbler firms with their billion-dollar books of business.  I’ve spent less time discussing how online brokers are luring assets.

Online Advisoretrade_onlineadvisor

I had the opportunity last night to have a guided demo of a recently-launched E*Trade product, Online Advisor, with E*Trade’s Liat Rorer, VP of Investment Products.  Online Advisor, developed as part of E*Trade’s newly-minted Investor Resource Center, is a nifty little financial planner-in-a-box.

In a quick and easy 4-step process, Online Advisor: Continue reading

WSJ: Navigating online personal finance sites

I’m not particularly a fan of these Mainstream Media (MSM) overviews of Internet tools.  I find, more often than not, that they’re typically short on analysis and don’t help investors really navigate what’s really out there, why these tools are important, and how investors are successfully using them.

This short video piece (2:45) ran late last week on the Wall Street Journal’s website (sorry, couldn’t get the video to embed for some reason).  It’s a cursory overview of some sites focused on personal finance (Mint, Wesabe) with the perspective of more people wanting/needing to take control over their finances and investments in light of the recent financial tsunami.  The interviewee is Shelly Banjo, Dow Jones Newswire’s reporter on wealth management.

A couple of sites are mentioned explicitly.  Simplifi, a site that helps investors build their own financial plans, is mentioned as a good resource for do-it-yourself investors.   Covestor, a tool that allows investors to see what others are actually doing with their investment money, is cited as an important site “so you don’t have to take advice from some financial advisor trying to sell you something”.

Frustrating to see MSM’s  quick gloss-over of security and privacy issues.  When asked about security with some of these sites, Banjo responds, “It’s OK.  These sites have to be secure so people will use them.  So, they’re OK.”  In a way, she’s right.  No one would use these systems if there was a likelihood that his entire financial history and net worth made its way online.  Security is an important issue — I don’t think it’s enough to reason-away security issues.  Be sure to check security/privacy policies of any site you may consider using for online investing/personal finance.

Anyway, also check out Banjo’s “The Best Online Tools for Personal Finance” that ran in today’s WSJ.

Twitter attracting new investment research products

Twitter certainly has gotten some great free press as of late, with Ashton Kutcher and Oprah all entering the fray.

All this excitement has not been lost on investors.  Traders have been using a service called StockTwits to trade breaking news, ideas, commentary and data on the broader stock market and individual stocks.  I like to use a Twitter client like TweetDeck to manage my Twitter experience.  It even has a built-in interface to StockTwits so I can monitor chatter around my portfolio.

upside-premiumIt’s great to see new investment products being rolled out for new platforms.  If investors are consuming information via Twitter, so why not?  So, while a group of early adopter investors are using Twitter to improve their trading, they now have a choice of 2 premium products to home their trading prowess.

Via an announcement today on the StockTwits blog, it was announced that StockTwits is marketing two subscription products produced by two outstanding memebers of the StockTwits community.  Investors can pay $50/month or $500/year for access.

One of the products is produced by Upsidetrader, a blog written by Joe Donohue, who was a hedge fund founder after a 13 year stint as a retail broker at Kidder Peabody, Smith Barney, Bear Stearns and Lehman Brothers.

According to Upsidetrader, you get the following with your subscription:

  • Weekly newsletter provides expert trading theses and pointed strategy for the coming week, as well as a detailed review of previous views; it is distributed during the weekend.
  • In addition, Joe will post charts 2-3 nights during the trading week, providing clear, actionable set ups.
  • Joe will educate you regarding his proprietary technical analysis system through the presentation of trades.
  • You will have direct access to Joe through the StockTwits community platform.

StockTwits Business Model

Here’s something interesting.  This new service is being delivered for a fee over Twitter and a 3rd party, namely, StockTwits is pocketing the profit.  Twitter doesn’t see any of it.

I assume StockTwits does the marketing and billing, the two analysts write and manage the research, and there is a revenue share between the parties.  Is this a new model, fee-based, Twitter-deliverd, investment research?

What do you think?

What is CBS thinking @ launching a finance site now?

AS per the article on All Things Digital, it appears that CBS is launching (yet another) finance site.

The site, Moneywatch.com, appears (it’s just a placeholder site right now) to be a slick investment website that combines  personal finance flair with moneywatch-screenshotindustry information, job/career info and investing content.  All this is held together by a large streaming video embed in the center of the page.

CBS is serious about this launch.  According to ATD:

…The real one should launch in mid-March, says Greg Mason, who came to CBS via CNET and is overseeing the operation. He’s hired Eric Schurenberg, the former managing editor of Time Warner’s (TWX) Money magazine, to handle the editorial, which will focus on personal finance rather than general business news.

CBS bought CNET last year and this appears to be the first significant example of CBS/CNET/BNET cross-platform collaboration.

It may seem like a crazy time to be launching a personal finance site — during the economic disintegration we’ve been witnessing.  According to Mason, though:

So: Why launch a personal finance site when everyone’s finances are being obliterated? Because that’s when everyone is acutely interested in personal finance, Mason argues. “Admittedly, it’s a little countercyclical,” he says, but argues that “CBS kind of figures that the economic crisis will be one of the big stories for the next 18 months.”

I don’t really want to talk about the business model.  CBS is as mainstream media (MSM) as you can get and they’ve got advertising relationships they can leverage and provide more inventory for.  Like Conde Naste’s Portfolio, high end advertisers are looking to reach this demographic.  CPMs, the value ascribed to 1000 advertising impressions on a website, are getting shafted and larger multi-quarter ad deals are getting pushed out, if not outright cancelled.

But let’s assume that CBS does a better job monetizing their new property than Conde Naste did theirs.

What gets me though is that Moneywatch really looks like just a me-too site.  How is this different than News’ (ugh, farewell Dow Jones) Marketwatch?  Yahoo Finance with Tech Ticker?  SeekingAlpha?  There doesn’t appear to be anything novel, anything that is not readily available other than what appears to be some proprietary video content.  How much is that worth in this environment?

Where is the breakout?  Where is the next big new thing?  There are so many opportunities available in the post-Wall Street era that it seems almost a waste to focus on yet another financial news site.

Photo credit: All Things Digital

Yahoo Finance sprucing up globally…yawn

from compete.com

from compete.com

I love Yahoo Finance.  Even if they weren’t the first or even the best financial portal, it has been the go-to place for investors, both individual and institutional, to research stocks, industries, markets, and ETFs — for years.  Many gripe that Yahoo has been slow in turning the huge ship that is Y Finance, but even with Google in the financial portal market, Yahoo has pretty much held it’s own against MSN Money as well.  Anecdotally, I’m spending more and more time on Google Finance because of two reasons:

  1. One page format: I get most of what I need with only one click.  Yahoo requires more surfing.  Google doesn’t do as good job providing news and press releases.
  2. Basic charting function: I like Google’s basic charting function.  It loads faster, doesn’t crash my browser like Yahoo’s advanced charts and tallies returns based on specific time frames that a user chooses (something Yahoo doesn’t do).

It’s with this quick backdrop that I want to discuss Yahoo’s announcement today on the Yahoo Finance blog that Yahoo Finance has gone global.  While I’m no marketing whiz, the announcement is more about Yahoo getting its engineering act together than providing leading-edge financial content or data.

From the post:

Engineers, programme and product managers in eight Yahoo! offices and four time zones worked as One Yahoo! to make the vision of a Global Finance Team a reality. Until six months ago, the vast majority had never worked together or even met – but this hasn’t stopped us working as a team and delivering a great product.

While it’s a large feat launching 15 new finance pages across European countries (see sample) to supply users with the same info U.S. users have grown to rely upon, this is more about fixing Yahoo than fixing Yahoo Finance.  Yahoo properties have long been plagued by a seeming lack of foresight about overall integration both at the corporate level and at the operational level.  As a user, it’s clear to me that Search doesn’t share all its toys with Search Marketing nor with Hotjobs or Photos.  The fact that the internal Yahoo Finance engineering team was able to plan, execute and launch a global project doesn’t really impress me (were things that bad at Yahoo?).  A user expects services from a global player in this field to encompass global data and info and be accessible seamlessly.

Now that Yahoo has its engineering ducks in order, I’m kinda excited what we may see out of a Yahoo Finance team that created a groundbreaking product years ago and has made only incremental changes in all the years since.

Dollar-hedged foreign ETFs on their way

My business partner, Aaron Katsman, frequently asks for audacious things.  When he fires up “wouldn’t it be nice if…”, you generally brace for an interesting idea.  He does a lot of international investing and likes to use ETFs for certain exposure.  I found it interesting when he recently mentioned how he’d like to have dollar-based foreign ETFs — but with the dollar exposure hedged out.

Well, come on down, Aaron.  IndexUniverse.com is reporting that WisdomTree has filed for currency hedged ETFs.  According to the article, “The WisdomTree Currency Hedged DEFA Fund and the WisdomTree Currency Hedged Emerging Markets Fund track indexes that seek to minimize the effects of the changes in the holdings’ local currencies against the dollar”.  The funds do this by incorporating one-month forward currency contracts to try to minimize the effects of currency fluctuations.

A lot of the move in foreign markets up until the recent pullback has been fueled by a weaker dollar and it’s interesting to think about how these currency hedged ETFs might be used in a portfolio, particularly for investors looking to tap into foreign markets without the effects of currency movements.

Roger Nusbaum, onse of my favorite sources on investing in general and ETFs in particular, is pretty juiced about the whole development.