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Social Finance

 
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jabailo



Joined: 20 Mar 2006
Posts: 1273
Location: Kent (East Hill), WA

PostPosted: Sat Sep 03, 2011 12:48 pm    Post subject: Social Finance Reply with quote

Commenting on an article in Internet Evolution about a writer for a technical blog, who was revealed to own stock in companies he wrote about (the editor subsequently abandoning high journalism altogether and becoming head of stock fund!), I said, essentially, "why not". I mean, put your money where your mouth is! Many business journalists will tout this or that stock or trend...but are they buying themselves? And next year, if the idea was proven invalid (stock sunk) did they take a hit just like their readers?

Now take it a step further. Investing sites such as Sharebuilder, ScottTrade or E-Trade could be turned into social networks...in which you could plainly see (assuming the users allows it) the past performance and networth of individuals using the service. You could then "Fan" them but also mirror their investments. Find the guy who knows what he's doing...and do the same thing!

A further abstraction would be a kind of second derivative. Instead of investing in a stock or stock fund...invest in the person who is making money. Invest in him, let him invest your money in what he is buying...and then let him keep a percentage. Yes, it could be all very Madoffian...but why not...combine the social and the financial!
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brian-hansen
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Joined: 17 Mar 2006
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PostPosted: Sat Sep 03, 2011 2:01 pm    Post subject: Reply with quote

Why not? Ever hear of "pump and dump"?
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jabailo



Joined: 20 Mar 2006
Posts: 1273
Location: Kent (East Hill), WA

PostPosted: Sat Sep 03, 2011 5:50 pm    Post subject: Reply with quote

Quote:
"Pump and dump" is a form of microcap stock fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements, in order to sell the cheaply purchased stock at a higher price.


http://en.wikipedia.org/wiki/Pump_and_dump

This would be the opposite of what I am proposing. As stated, it would allow the investor to see the actual performance of other real investors and let them "tag along" or invest with them for a fee.
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brian-hansen
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Joined: 17 Mar 2006
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Location: Oregon

PostPosted: Sat Sep 03, 2011 6:18 pm    Post subject: Reply with quote

You asked "why not" when it was revealed.

That such information could be successfully hidden means that the writer could well be guilty of fraud without your ever knowing.

The model you propose requires an almost perfect level of "transparency" to protect us (the audience) from being fleeced. Disclosure and transparency are the right direction for these cases, I agree.

If we had this near perfect transparency, then it wouldn't be suddenly "revealed" that the writer happens to act in their own self interest, as opposed to be offering necessarily dis-interested, objective information and advice. Your question "Why not" requires a counterfactual, a world distinctly at variance with the one I believe we both inhabit.

Your proposal would require a fair bit of new regulation, and could be somewhat intrusive to people's personal privacy. As much as I like the freedom to be left alone and not pried into, I would tend to support the implied regulations and diminution of some freedoms, to be able to have the kind of faith in the pronouncements of our public, financial leaders and mentors that you seem to have. For myself, that would mean I avoid touting stocks. For others, that would mean a new level of government intrusion. I wonder how it is that you bring these implications into coherence with your "rabid Republican", T-Party, T-Publican belief system?
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You've found the right place to add to your existing collection, or to start a new one.
jabailo



Joined: 20 Mar 2006
Posts: 1273
Location: Kent (East Hill), WA

PostPosted: Sat Sep 03, 2011 7:58 pm    Post subject: Reply with quote

You seem to be fighting the last war...maybe one from the 1980s.

The point being that a socially mediated website, such as FinanceBook (yes, I know that fictitious name is illegal...or rather legal, but owned by someone other than myself) would be its own revelation.

The person makes his portfolio visible. The profile shows his numbers.

You decide to follow or friend him -- or in this instance -- make him your Broker.
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