Finance, the Universe and Everything
Posted on March 19, 2007 by Richard Beddard
Filed Under Investing, Ramblings |
You’ve heard of Wikipedia? It’s an online encyclopedia written and edited by you, and me, and anybody else who clicks on the edit button on one of it’s 1.6m pages. Curiously, despite doubts that a process that resembles anarchy could ever beget a publication comparable to the Encyclopædia Britannica, that’s precisely what’s happened.
Now an American start-up is building a Wikipedia for company research, and it’s just added pages for companies listed on the London Stock Exchange. Already it claims to have beaten mainstream media to the punch over Alcoa takeover rumours. Over the weekend I chatted with one of ValueWiki’s founders, Jonathan Stokes, about filling those blank pages, fact and opinion, wiki fear, and the importance of the UK stockmarket:
ValueWiki has pages for 65,000 securities. All of them contain links to various sources of information but the real value will come from contributions from investors. How’s it going? How many contributors do you have, and how many pages have they written?
Like Wikipedia, a handful of our users write the majority of our content. ValueWiki is brand new and still in pre-launch. So signing up with ValueWiki is a lot like joining Wikipedia in 2001 - lots of blank pages!
This is exciting because it means I can write spreadsheets showing 100% growth every month. On the serious side, joining a new community like ValueWiki means having a strong voice in shaping the direction of the site for years to come.
Your project goal is to create a complete catalogue of world securities, but the financial landscape changes every second. Aren’t you daunted by all those blank and incomplete pages?
Encyclopædia Brittainica’s paid staff could only write 118,000 articles in 240 years. Wikipedia has written 1.6 million articles in five years! So it appears Wiki is a great model for producing terrific amounts of writing and research.
The project relies on altruism - people give up their time to write about companies. How confident are you that investors, for whom time is money, will be as generous as, say the contributors to Wikipedia?
Well, it doesn’t have to be generosity if everyone benefits! Thousands of investors spend time writing on Interactive Investor. You can call that altruism, but I suspect Interactive Investor users simply enjoy and benefit from participating in your message board communities.
ValueWiki is very similar. Millions of users do not financially benefit from writing Wikipedia. But I do imagine our users will financially benefit from timely stock research on ValueWiki.
Since anybody can edit a page on ValueWiki, how do you prevent them from being hi-hacked by fraudsters and manipulators. And what happens when investors dispute a story?
The community polices itself, just like on Wikipedia. Everything factual and referenced goes on the article page and all discussion takes place on the message board. We also have chat rooms for all 65,000 securities. If factual disputes do occur, they are handled democratically by the community.
Looking at some of your more complete pages, Apple, say, there’s a lot of factual information about the business but there’s not much investment analysis. Bearing in mind your name, is that something you expect to develop?
Every free ValueWiki member gets a userspace that functions like a blog. Members can publish whatever analysis they like and link to it from each article page. We’re also working on voting and portfolio features to give a stronger voice to user opinions.
To me, Wikis are a little daunting. There are lots of pages, and almost everything can be changed. What advice would you have to someone who wants to give it a go, but fears their efforts might just be lost, or overwritten.
Yes, the Wiki fear factor is a key concern of new users. The truth is Wiki is just as easy as a message board. You type, preview, and save - that’s it. As for longevity, what you type on a Wiki has the potential to stay live for years; what you type on a message board often gets buried within minutes!
Tell me about you and Zach. How did you team up? Are you full time on Value Wiki? Are there are other members of the team?
Zach is the technical brains behind our operation. I think he can build an H-Bomb out of a sardine can. I think I first met Zach when we were assigned to work on a science project together in high school. That project marked the first of several times Zach accidentally electrocuted me. It’s not that he’s incompetent, it’s that I’m accident prone. That’s what he tells me, anyway.
I think I’m right in saying Wikipedia is not for profit. Is that true of ValueWiki? What do you hope to gain from ValueWiki, and what will it’s users gain?
Yes, ValueWiki is for-profit, although Zach and I aren’t exactly filling jacuzzis with cash just yet. We only monetize the site through Google Adsense and recently discussed removing the Adsense entirely. Our primary focus is on growing the community.
Eventually, we do hope to earn enough money to cover our growing server and development costs without having to resort to user donations like Wikipedia. The gambit is that ValueWiki users will find ads less annoying than funding drives!
And finally, you’ve added the UK stockmarket. Is it of much interest to private investors in the US? Or are we likely to be keeping ourselves company on your UK pages?!
To be honest, my father is a Mancunian, and he taught me that God is an Englishman. So it was inevitable that ValueWiki would add the UK. America is entering a recession and investors may move more money overseas. The NASDAQ is trying to buy the London Stock Exchange, and the New York Stock Exchange already made a deal with EuroNext. As we truly enter a global economy, we believe ValueWiki should become a global resource.
NB: To find UK companies on ValueWiki go to its LSE page or search for exchange:ticker. For tesco that would be: TSCO:LSE.
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What a great idea - it has the potential to help towards the economist’s perfect market conditions which must be a good thing andalso a help to new investors