Last week, I was contacted by Piqqem. Then wanted to tell me about their service and get my thoughts.
I have to admit that I didn’t find the Piqqem site that interesting. I love the idea of crowdsourcing, but it seems to me that the stock market is already and efficient system. By buying a stock, I’m putting my vote of confidence into the company. The price of the stock reflects the sentiment of the crowd. So why do we need Piqqem? To get to the bottom of it, I decided to ask the CEO, Jett Winter. What follows is a brief e-mail interview.
Lazy Man: Please give us a brief overview of Piqqem. What should users expect to find there?
Jett Winter: Piqqem is a web app that applies the wisdom of crowds to stock market predictions. It captures users’ stock predictions, analyzes them, and then displays aggregate results back to the users, enabling them to see what ‘the crowd’ thinks about particular stocks. Users can expect to find an interface for making stock predictions, the ability to make user takes (short comments) on their predictions, user-editable wiki pages and financial timelines for each stock, and crowd sentiment on each stock and organized into lists (e.g. the 10 stocks that the crowd views most
favorably, the 10 stocks that the crowd most disagrees on), and visualizations of crowd sentiment, among other features.
Lazy Man: I’m a huge believer in crowdsourcing. However, aren’t the equity markets essentially an example of very efficient crowdsourcing? It seems to me that the best value of something can be gauged by people voting with limited resources that are dear to them – in this case people investing with their hard earned dollars by actually investing in an equity.
Jett Winter: This is one of the two standard criticisms we hear about the app. The first criticism argues that the crowd’s opinion already reflected in a company’s stock price, this is not exactly the case. The stock market is a summation of the demand and supply of stock market shares, in which few big buyers following the advice of few expert analysts completely overwhelm individual investors. Piqqem, on the other hand, gives an equal vote to all investors – whether expert or not – therefore providing a much more accurate representation of what the crowd thinks. Besides, the stock price today is what investors think of the company today – we want to know where the stock price is going in the future. The second criticism argues that if Piqqem works, it will invalidate itself. But if Piqqem invalidates itself, this means that there are a huge number of people trading on crowd wisdom, which means that the Piqqem crowd would have been accurate enough to get itself to that point, hence Piqqers would have made considerable money already. In other words, it would have been Piqqem’s success that, in turn, made it invalidate itself. Every system that tries to predict the market has this potential problem, but to date, it hasn’t actually happened.
Lazy Man: Those are both very good points. From what I’ve read on crowdsourcing and predictive markets it seems that they work most efficiently when someone is risking something of value to them. One of the first articles I’ve read regarding this is this one. Does Piqqem currently allow people to put something of value on the line? Will it in the future? I appreciate that everyone is put on a level playing field (Buffett can’t directly sway the Piqqem market), but wouldn’t you still want there to be cost/benefit for the person in choosing a stock?
Jett Winter: We currently are following a pure wisdom of the crowd model where every vote is equal. We actually don’t want weighting as that begins to move our model more towards the prevalent expert approach that we see today in the stock market – ie the large funds move the market where the little guy has no impact. We believe that not all public information is efficiently presented in the stock market and interesting information exists with individuals. Our job is to capture that information or sentiment. We may in the future add some incentives for voting, but as of today we are pure to the wisdom of the crowds.
Lazy Man: I noticed, from the footer of the site, that Piqqem seems to be a Crowd Technologies company. What other companies are in the Crowd Technologies umbrella? What else can we expect to see in the future?
Jett Winter: Crowd Technologies is the corporate company with Piqqem.com as one of its properties. We have also released Stockmoose.com which is a quick version of a relative ranking site for stocks. We have other ideas in the works although nothing we can discuss at the moment.
“However, aren’t the equity markets essentially an example of very efficient crowdsourcing? It seems to me that the best value of something can be gauged by people voting with limited resources that are dear to them – in this case people investing with their hard earned dollars by actually investing in an equity.”
Exactly my thoughts. Why would I want to listen to a stock pick by someone who would not be willing to buy it with their own money? Buying it with your own money is voting for a stock and the purest form of crowd sourcing. Isn’t that why gambling markets can better predict outcomes – because people are putting real money on the line.
Although the markets themselves can be wrong and can swing with popularity, I think that you would see similar behavior in crowd sourcing stock picks. Plus, you should see lots of bogus data points. Anyone who has browsed Yahoo Finance’s message boards knows that.
I remain absolutely unconvinced of their response and of the value of the site.
There is something similair to this called Intrade (Intrade.com) only it deals with events and politics. I think it is just another gimmick like wizetrade.
Rich Credit Debt Loan says
it seems to me that the real answer piqqen is trying to generate is the # of different people that buy/sell the stock, rather than the amount bought and sold. I am not sure why that is relevant when the actual price is derived from the latter.
And the stock markets are efficient. Information is digested and reacted to faster to in this environment than any other. Prone to exaggeration perhaps, but it is surprising the numbers of times future information is already accounted for. So I don’t buy the stock price today vs the future argument either.
Lazy Man says
RCDL, I think the theory is that getting the number of different people may be a better indicator of the future than a few institutional buyers.
I’d say give it 6 months and see if the picks on the site outperform the market or not.
WeSeed Writer says
This is pretty interesting. Like Jim said, time will tell at how well this works. But on the other hand, it’ll be interesting to see how the recommendations change as users see how right/wrong they are with their picks.
Now THAT would be interesting…maybe we need to involve the Freakonomics dudes on this one.
This whole crowdsourcing thing is trying to work its way into every industry….There are a few stellar examples like Threadless.com…bt when dealing with financial instruments and the regulations, I don’t think crowdsourcing will last in the stock market realm…
Stephanie Gerson says
@WeSeed Writer – the Freakonomics dudes are semi-involved on this one, they wrote about the pre-Piqqem app back in August. but I agree, it would be great to get their take on Piqqem now, if you know anyone….
@RCDL – I’m with Lazy Man. the stock market is a summation of the demand and supply of stock market shares, in which few big buyers following the advice of few expert analysts completely overwhelm individual investors. au contraire, Piqqem gives an equal vote to all investors ““ whether expert or not ““ therefore providing a much more accurate representation of what the crowd thinks. besides, the stock price today is what investors think of the company today ““ we want to know where the stock price is going in the future.
@FinancePuzzle – as with all new technologies, we learn about crowdsourcing by experimenting with it in many different ways! (in tech-speak, you could say we’re at the peak of inflated expectations in Gartner’s hype cycle.) in my mind, there’s nothing inherent to financial markets that makes them infertile for crowdsourcing. but doubtlessly, this will be a fascinating one to observe.
and in general, Piqqem is not advertising itself as a silver bullet, but as one in a portfolio of sources of financial info, complementary with expert analysis etc. and Piqqem is a significantly different one – different from individuals and different from the market – which makes it valuable, IMHO.
How is this different from Mottley Fool?
Lazy Man says
I couldn’t tell you… don’t use either service.