Tag: stocktwits

How to know what the market is saying about your stocks

In the last of couple of years you might have noticed multiple instances of people (mostly, media) talking about traders and trading houses making winning stock market bets based on what they read on Twitter or some discussion forum. While cases like these are few and far between, it is certainly a reality that you “cannot follow the stock market enough“!

Traditionally, investors have depended on analyst opinion, who, in-turn, often base their reports on technical analysis. But off-late the unpredictability of the market has amplified because of the reduced time-to-market of stock moving news & information. While deep-pocketed institutional investors have started making significant investments in technology to stay ahead of the social information and analysis curve, smaller traders and retail investors need to find innovative ways getting their hands on similar information, fast enough.

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Student? Looking to Invest in Stocks? Read on …

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Off-late, we have been getting many questions from young folks (especially students) on whether they should invest in stocks and how they can make informed calls as they go about doing it. With the presence of apps like Robinhood and stock diversification mechanisms such as Motif Investing it has become exponentially easier to invest in stock markets than it ever was. And we believe this is a good thing. Investing could give you extra cash in the short run so it’s obviously useful. But more importantly, it teaches you discipline, forces you to keep track of your finances and broadens your horizons.

Successful investing is a long-term game. Fortunes are rarely, if ever, made “overnight”. Most successful investors will tell you about how they had several good and several bad investments over time and how their good investments outnumbered their bad ones to give them nice returns. So in essence, one has to invest often and invest actively to get to their ROI targets. This, of course, does not hold for passive investors who put their money in tax saving investments for the sake of “saving money” and not for “making money” from the markets.

In this context, as a student interested in stock investing, you are at just the right age since you have enough time to make more good than bad investment decisions. But, your path is also paved with many pitfalls and risks that can be avoided by being extra careful and knowledgeable about what to do. Here are a few quick thoughts that could help you make fewer mistakes and hit some homeruns as you go about investing actively. Do take it with a pinch of salt and feel free to add more points in the comments section, based on your personal experience if you have any.

Start early

It’s great that you’re interested. Don’t let your interest linger for a few years. Do your research and start investing early. More time on your hands will mean more potential for growth and longer-lasting appetite for investing. Considering that interest earned gets compounded over time, even a small investment will go a long way into giving you hefty returns.

Research

This cannot be stressed enough. Today, you have research tools in your hands that just didn’t exist a few years ago. From reading organized media research and opinion – WSJ, MorningStar, Benzinga et al – to surfing through StockTwits, Twitter, Estimize and SeekingAlpha you can understand your stocks really well. Thousands of traders and analysts are talking on these networks, you just have to develop a mechanism to filter out the noise – which you will if you keep observing for a couple of months.

Interact

Investing is turning social. While there have been concerns in the past about people sharing information for the sake of their vested interests only, gradually investing as a lifestyle has managed to turn social – much like everything else in life. You do have to be extra careful not to get influenced by malicious elements (‘coz there are some) but you can avoid that by broadening your “follwings” and listening to more people than less.
Also, once you identify some genuinely good investors it’s good to discuss, build a rapport and share. Much can be learned in the process. As you develop your optimal investing strategies, share with peers to fine-tune them and get more out.

Accounting Discipline

Keep a tight leash on your finances. This is not to say that you should spend carefully. This just means that if you keep track of your moneies, you will know exactly how much or how little to put in your next investment. Active investing entails several small to large investments, so unless you’re super-rich already it’s imperative that you know your incoming and outgoing very well. If you are super-rich you still have to track, though, just that your byte sizes will be bigger!

Avoid margin trading

One deterrent for margin trading is, anyway, that small ticket investors find it difficult to get-in so that you should keep you protected. But in general, as a student you want investing to fun and rewarding and not burdensome. Taking on debt is never a good idea unless you are very experienced and sure of your methods.

 

So, there you go. Didn’t realize this will turn out to be a “5 points for X” post! Feel free to reach out to us at research@stockal.com or drop a note in comments in case you want to discuss investing.

The Age of “Stockal” Media Cometh!

This is part 1 of a 2-part blog series on the imminent future of stock market investing and the way socially active investors and traders can make the most of it

Def: Stockal Media = (Stock Market + Social) Media

We define “Social”, here, as a combination of popular platforms like Twitter, StockTwits, eToro, Facebook, discussion forums like SeekingAlpha, commenting platforms like Disqus and LiveFyre, and blogging platforms like Tumblr, WordPress and Blogger. Over the past 2 years it’s has been proven, with a fair degree of certainty, that things (news, opinions etc.) reported on social media impact stock prices. The crucial thing here, as a trader, is to be able to spot whenever such information emerges.

In order to understand this better, let’s look at a few factors which tend to impact stock prices and see how information for each can be discovered on social media.

Index movement: Movement of any stock index is a representation of the movement of the underlying stocks. So if you hear enough times, from enough or highly credible social sources that the index is likely go up (or down) – making the sentiment bullish, assume that the stocks that make up the index, and similar stocks, by extension, are equally likely to move up (or down) as well. In order for you to discover such info, you need to be following credible social media handles, forum threads and blogs that talk about the index.

Company’s Financial Health: Most seasoned investors, before making a decision to buy a stock, look at the financial health of the company the stock represents. Did the last earnings call set a positive mood? Does the sales pipeline or potential customer acquisition look strong? Has the company been able to pay regular dividends? OR Is a successful CEO going to move out? Is a potential law suit brewing against the company? Is it in discussions to make a large acquisition? These are just some of the questions you need answers to – constantly.

So, how do you track? Well, determine who the key executives of the company are and follow their social handles. See if someone hints at a new customer meeting. Track what the investor relations team of the company is telling traders on platforms like Linkedin or StockTwits. Track the customer sentiment and chatter for the company’s products by looking at Twitter interactions between customers and the company’s social media support handles. Track what the company’s representatives in technology or industry events are saying.

Industry Outlook: A company’s stock price may go up or down depending on whether investors and analysts think its industry is expanding or contracting. So if a company’s financial health is fine but the industry is not growing then there’s reason to believe that the company may not be able to sustain its growth. This is likely to lead to a fall in stock price over a medium-term period.

So how do you know which way an industry is headed? Best is follow industry analysts, wherever their social presence. You are most likely to find them on SeekingAlpha and Twitter. But interestingly, a number of them blog quite heavily – such folks may not be accredited analysts from large organizations, but they have a history of making correct estimates when it comes to industry performances. These can be discovered through blogging platforms, comment threads and discussion forums. It’s almost certain that they have a reasonable Twitter presence as well.

Impact of Social Investing Platforms on Stock Movements