Tuesday, June 2, 2009

Investing - the web 2.0 way

We are using web 2.0 to collaborate, network and share ideas increasingly in our lives. We would be members of some or other social networking sites, registered to some or other groups and forums based on our interests. These activities may or may not help us in our professional and personal lives. All depends on how effectively we use the tools provided these platforms. Here is a look through on how web 2.0 can help us in making investments decision.

Firstly, join few forums or groups that have active discussions related to stock markets and investments in general. These may be found on some or other social networking platforms or sites that hosts forums and groups (like Yahoo and Google) or sites dedicated to stock markets itself.

Next, start screaming your stock tips in these boards, luring investors or traders to invest in your stock tips. This would lead to run (up) in the prices of the stocks you recommended. When they have sufficiently run (up) offload your holdings making a decent profit. (Ha Ha, just kidding)

Markets are usually gripped with excessive optimism or excessive pessimism. There are times when investors are ready to pay anything to get a piece of that worthless stock, and at times they are ready sell for anything to get rid of that blue chip stock. Market's behavior is very erratic and sudden. It takes no time to reverse the sentiment. If somehow we are able to watch and measure this very behavior we stand to make right investments decisions.

So how can web 2.0 help us here. In this connected world, news and sentiments travel quickly. By being part of right forums and groups, you can get access to information about markets. This would include personal views and opinions of fellow members, links to new articles mentioning what experts are saying that time and then many research reports by various investment houses. These give you holistic view point of what market mood is. Key lies in measuring the market mood. Its very much like thermometer is used to measure the body temperature, these forums and groups measure the markets temperature - how heated or how cold market is.

If you would have paid attention from start 2006 to end of 2007, views were generally optimistic in these forums and groups:
1. There were more board members participating.
2. There were more and more personal opinions and so called stock tips.
3. The links which posted (so called) experts take on market were generally positive.
4. Research reports in some or other twisted way project much higher growth and optimistic targets.
In short the good times were here to stay forever. This was different (was the undertone)
Such signs usually indicate market temperature is running high and time is to stop making further commitments (without much deliberation) into the market.

Come later half of 2008 to couple of months back, views were almost pessimistic now:
1. There was declining to the point absolutely nil participation from board members.
2. Every one was predicting doom and you could hear sad stories of they portfolios.
3. The links which posted (so called) experts take on market were now revised to new (further) lows.
4. Research reports in some or other twisted way project everything to a lower level than what currently was.
In short it was like end of the world has come and we are going to stagnate forever.
Such signs usually indicate market temperature is running low and time is to start making further commitments (with deliberation of course!) into the market.
So those who gauged the market sentiments correctly and did invest when no one was investing sure must be feeling lucky and happy today.

Also you would notice that now market temperature is slowly rising as the activities in these groups and forums is coming back to previous highs (so are the markets!). Whereas economy has still not recovered.

So being glued to right piece of information on web 2.0 and using that information in making investments decision helps (or not), only time would tell. In my personal opinion this does help. You don't need to watch those TV channels or spend time and money on countless seminars and workshops, just the ubiquitous web 2.o is enough to bring everything to your screen. Whats important is how you like to use that information.

I end by famous quote by Mr. Warren E. Buffet:
Be fearful when others are greedy and greedy only when others are fearful.


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