On the Nature and Origins of Trendfollowing & Social Investing Sites

Covel has a nice article posted on his site by one of the original Turtles – “On the Nature and Origins of Trendfollowing“. There is a ton of literature mentioned (lots published in the 1800s and early 1900s).

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This might as well be magic as far as I’m concerned.

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When Diversification Failed

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Find this blogger a new gig and get $1000 cash.

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Actively Managed ETFs are here.

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Buy stocks coming out of bankruptcy.

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Time to get long coffee!

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Brilliant idea.

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Demographics of new buyers entering the housing market.

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Let’s welcome some kinda famous professors to the blogosphere. . .

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Is this bear going to be like the 29-32, 73-74, or 00-02 bear markets (or none)?

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The CPI narrowly missed having the first year over year decline since 1955 at 0.1%. And gold is up – what do you think gold is going to do if/when inflation returns? Nice chart here.

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1.75% fees for 2-5% returns over Tbills (or, 2-5% returns total since they yield basically zero)??

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Well, that was sure a terrible way to start the year!

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Inc’s Guide to the leading Angel Investing Networks

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I consider most of the social investing sites exercises in survivor bias (Covestor, Marketocracy, ka-Ching). If you throw together a million teenagers writing up stock ideas in their pajamas some are bound to have great performance. Check out the Marketocracy MOFQX mutual fund for a not so pretty real world example.

However, I have no doubt there are good non-professional stock pickers out there.

If I ran one of these sites, I would offer something akin to the ValueInvestingClub. VIC is an application only group that does stock write-ups and offers $5,000 per week to the best idea (founded by the Greenblatt and the guys at Gotham Partners hedge fund -SumZero is also a nice invite only site for buysiders). Well thought out, intelligent stock write ups are much more interesting to me than trading portfolios (whether real or imaginary).

Why not have a similar idea, but open it up to everyone? ie compensate the users by either a) a percentage of all revenues from ads on any pages from their write-ups and/or b) payout $X to the best idea monthly/weekly etc. Just a thought.

Cool new paper examining the ValueInvestorsClub stock pickers from the guys at Empirical Finance Blog:

Fundamental Value Investors: Characteristics and Performance

Abstract:
We examine novel data on the detailed investment decisions of professional value investors. We find evidence that value investors are not easily defined: they exploit traditional tangible asset valuation discrepancies such as buying high book-to-market stocks, but spend more time analyzing intrinsic value, growth measures, and special situation investments. We also test whether fundamental value investors outperform the market in our sample (January 2000 to June 2008). Analyzing buy-and-hold abnormal returns and calendar-time portfolio regressions, we conclude that value investors have stock picking skills.