Ask HN: Review my investment website startup, StockYoyo.com
25 comments
Hey guys, I was there for the demo yesterday. I wanted to talk to you but I had to leave early due to a prior commitment. I hope you'll take the comments below as constructive criticism.
To better prepare for my comments, let me start with a few facts most investors don't know. (For the impatient, there's a TL;DR at the end).
1) The stock market is not infinitely resilient; the price of a security does respond to investors' actions, as per supply-demand.
2) The price of a stock is not a random, meaningless number that keeps going up and down in funny ways; it actually measures the market price of the company (aka 'market cap', which is roughly equal to the number of shares times the share price).
3) The market price of a company is a very, very important barometer for both the company and the overall economy; to name a few, decisions for M&A (mergers and acquisitions) by other companies are based on such numbers, as are lending and investment decisions by banks.
4) For a lot of companies, the vast majority of their shares are traded/held by individual investors like you and me (as opposed to institutional investors, like pension funds, college endowments, mutual funds, etc); for the curious, you can check out the quantity 'institutional ownership' percentage of a company using your favorite stock quote tool (e.g. Google Finance).
An important corollary of the above facts is that, collectively, individual investors like you and me have an enormous power in driving up and down the market prices of public companies. Consequently, if most investors base their buy/sell decisions on criteria other than company valuation, it is likely that their actions will be doing a serious disservice to the market as whole: market prices of companies will no longer reflect the company's value (see below), and will instead reflect whatever is it that investors based their decisions on (such as the phases of the moon, whether the company is being hyped up in the media, amazing little charts that try to predict what the market will do next, etc).
Somehow we've got to an unfortunate place where many companies and publications incentivize investors to think in terms of "what will the market do", "let's ride this climbing wave", "don't be the last sucker to leave this stock", etc, instead of asking the simple question "is this company over- or under-priced?". This is bad for the market, bad for the economy, and consequently bad for investors.
I hope these words will help you reconsider the direction you're heading with StockYoyo. We need tools that empower investors to make more educated decisions, and not more "go-with-the-flow" services.
Check out Trefis.com for a step in the right direction. (DISCLAIMER: I am not by any means affiliated with them).
May I recommend the following literature:
- Irrational Exuberance, by Robert Shiller (For a gentle introduction on how collective misguided investment can lead to bad things)
- Value Investing, by Bruce Greenwald et al (For a gentle introduction to value investing)
- Security Analysis, by Graham and Dodd (To learn from the masters, using good old English from the 30s)
TL;DR: Services that treat the stock market as a gambling machine ("will it go up??") are doing harm to the market and the economy. Stock prices have a purpose and a meaning, and the market is suffering from the ill-advised actions of investors, who are victims of services that incentivize trades based on things other than company valuation, such as silly technical indicators, or popular consensus on whether a stock is going up or down.
To better prepare for my comments, let me start with a few facts most investors don't know. (For the impatient, there's a TL;DR at the end).
1) The stock market is not infinitely resilient; the price of a security does respond to investors' actions, as per supply-demand.
2) The price of a stock is not a random, meaningless number that keeps going up and down in funny ways; it actually measures the market price of the company (aka 'market cap', which is roughly equal to the number of shares times the share price).
3) The market price of a company is a very, very important barometer for both the company and the overall economy; to name a few, decisions for M&A (mergers and acquisitions) by other companies are based on such numbers, as are lending and investment decisions by banks.
4) For a lot of companies, the vast majority of their shares are traded/held by individual investors like you and me (as opposed to institutional investors, like pension funds, college endowments, mutual funds, etc); for the curious, you can check out the quantity 'institutional ownership' percentage of a company using your favorite stock quote tool (e.g. Google Finance).
An important corollary of the above facts is that, collectively, individual investors like you and me have an enormous power in driving up and down the market prices of public companies. Consequently, if most investors base their buy/sell decisions on criteria other than company valuation, it is likely that their actions will be doing a serious disservice to the market as whole: market prices of companies will no longer reflect the company's value (see below), and will instead reflect whatever is it that investors based their decisions on (such as the phases of the moon, whether the company is being hyped up in the media, amazing little charts that try to predict what the market will do next, etc).
Somehow we've got to an unfortunate place where many companies and publications incentivize investors to think in terms of "what will the market do", "let's ride this climbing wave", "don't be the last sucker to leave this stock", etc, instead of asking the simple question "is this company over- or under-priced?". This is bad for the market, bad for the economy, and consequently bad for investors.
I hope these words will help you reconsider the direction you're heading with StockYoyo. We need tools that empower investors to make more educated decisions, and not more "go-with-the-flow" services.
Check out Trefis.com for a step in the right direction. (DISCLAIMER: I am not by any means affiliated with them).
May I recommend the following literature:
- Irrational Exuberance, by Robert Shiller (For a gentle introduction on how collective misguided investment can lead to bad things)
- Value Investing, by Bruce Greenwald et al (For a gentle introduction to value investing)
- Security Analysis, by Graham and Dodd (To learn from the masters, using good old English from the 30s)
TL;DR: Services that treat the stock market as a gambling machine ("will it go up??") are doing harm to the market and the economy. Stock prices have a purpose and a meaning, and the market is suffering from the ill-advised actions of investors, who are victims of services that incentivize trades based on things other than company valuation, such as silly technical indicators, or popular consensus on whether a stock is going up or down.
I totally agree with you about the problem with "go-with-the-flow" rating systems. You should not simply be able to perform well by picking highly rated stocks. This is one of the problems we're trying to solve.
Our rating system actually has an internal pricing mechanism which is designed to drive the ratings toward zero and prevent piling on behavior. If you just follow the crowd you won't do well as a real investor and you won't score well on our site.
Judging by the feedback we've been getting that's not nearly as obvious as it needs to be and we're trying to figure out how to best show that.
Our rating system actually has an internal pricing mechanism which is designed to drive the ratings toward zero and prevent piling on behavior. If you just follow the crowd you won't do well as a real investor and you won't score well on our site.
Judging by the feedback we've been getting that's not nearly as obvious as it needs to be and we're trying to figure out how to best show that.
I also saw your demo at the HNDC meetup last night - nice job, and kudos for being brave enough to get up in front of a room full of critics.
Some feedback:
- Without seeing the demo, I'm not sure I would easily get what the site is about from a quick glance at the home page. You have some nice wording -- "A free and enjoyable way to learn about investing" -- but it's part of a scrolling animation and doesn't jump out at you. I also don't see the word "game" anywhere on the front page. It seems like your two key themes are "fun" and "learning" and those don't quite stand out enough.
- The actual game mechanics are a little confusing - why would users actually care about being the "executive" of a company? As an investor, I might care about learning more, or being exposed to good advice, but to assume that people will be motivated to win a game just because you created it seems like an overreach.
- Why would StockYoyo picks be better than one of the million other investing sites out there? For that reason, why would it be better than the ultimate "wisdom of crowds" valuation -- the market itself?
I could imagine that one of the numerous self-managed investment sites out there would benefit from having a compelling, easy to use game where aspiring investors could learn but then also easily transfer their picks into real money when they are ready. I'm thinking of the online poker model -- a .net site to learn with play money, a .com to use the real stuff. There might be some significant regulatory hoops to jump through to get this working but I can see real potential there.
Some feedback:
- Without seeing the demo, I'm not sure I would easily get what the site is about from a quick glance at the home page. You have some nice wording -- "A free and enjoyable way to learn about investing" -- but it's part of a scrolling animation and doesn't jump out at you. I also don't see the word "game" anywhere on the front page. It seems like your two key themes are "fun" and "learning" and those don't quite stand out enough.
- The actual game mechanics are a little confusing - why would users actually care about being the "executive" of a company? As an investor, I might care about learning more, or being exposed to good advice, but to assume that people will be motivated to win a game just because you created it seems like an overreach.
- Why would StockYoyo picks be better than one of the million other investing sites out there? For that reason, why would it be better than the ultimate "wisdom of crowds" valuation -- the market itself?
I could imagine that one of the numerous self-managed investment sites out there would benefit from having a compelling, easy to use game where aspiring investors could learn but then also easily transfer their picks into real money when they are ready. I'm thinking of the online poker model -- a .net site to learn with play money, a .com to use the real stuff. There might be some significant regulatory hoops to jump through to get this working but I can see real potential there.
I made the comment at HNDC last night that "Are crowds wise? That's arguable. But it definitely moves in herds."
The value of a well executed stock "betting" game is that, since what is being wagered is of little or no value compared to an actual market position, the herd may reveal it's intentions in the game before a similar movement is noticeable in the actual market.
For this to to be true, though, two necessary, but by no means sufficient, pre-conditions need to be satisfied: a sufficiently large and well-informed herd; playing a game that maintains the proper balance of care-free (not too much at risk) -vs- care-full (enough is at risk) gameplay.
The value of a well executed stock "betting" game is that, since what is being wagered is of little or no value compared to an actual market position, the herd may reveal it's intentions in the game before a similar movement is noticeable in the actual market.
For this to to be true, though, two necessary, but by no means sufficient, pre-conditions need to be satisfied: a sufficiently large and well-informed herd; playing a game that maintains the proper balance of care-free (not too much at risk) -vs- care-full (enough is at risk) gameplay.
Why would the crowd reveal its intentions earlier in a game than in the actual market?
It seems historically, the herd does the opposite. The game is an "easier" market than the real market; much like how play money poker is far easier than real money poker games.
Why would StockYoyo picks be better than one of the million other investing sites out there? ... My impression is the real value of this website is play versus plan. Other sites are more heavy and technical but this one is more light and fun.
I'll offer feedback on the ratings system. My one gripe with your site is that the "buy" or "sell" justifications provided by your users seem weak. For example:
If you'd really like these guys to learn about investing, you should think about putting prompts in to get them considering the various factors that might lead to this being a successful investment:
* What's this company's valuation? * How does it compare in the competitive landscape? * How well-capitalized is it? * Etc, etc.
It seems like these are "bus station judgments" in large part, where people go "i like this company, it will do well." Build in prompts for deeper consideration if you really want to teach people something and generate useful data.
Electric cars are pretty modern now and Tesla is one of the few companies, that really can offer some excitement to them
If you'd really like these guys to learn about investing, you should think about putting prompts in to get them considering the various factors that might lead to this being a successful investment:
* What's this company's valuation? * How does it compare in the competitive landscape? * How well-capitalized is it? * Etc, etc.
It seems like these are "bus station judgments" in large part, where people go "i like this company, it will do well." Build in prompts for deeper consideration if you really want to teach people something and generate useful data.
This is a good idea. It would be interesting to see people answering questions such as: At what valuation would you sell this stock? What do you think is a reasonable P/E for this company, and why? If the company isn't cash flow positive, in what timeframe do you expect it to turn the corner?
As a concept I like it, and I think your implementation looks good. However the level of commentary in the Cooperative insight is really weak, bordering on completely useless. I'm not sure how to solve that, but to me that is something that instantly jumps out and greatly lowers my impression of the whole site. I realize that it is early days and you don't have many comments to chose from, but perhaps some tough curating of the comments you display is still in order.
Saw the showcase at HNDC as well, interesting idea for sure.
Click: http://www.stockyoyo.com
Click: http://www.stockyoyo.com
Just saw this startup at the Hacker News DC meetup last night ... very cool concept!
I like the concept. It's light and fun and I could see how it would become addicting especially given your game mechanics setup. Are you using a third-party platform to run that?
From a marketing perspective, this might be something to pitch to high schools with finance classes. It's a bit lighter than some of the more technical stock simulations but I could see teachers using this as an intro to investing and a way to engage students. I think understanding how you're positioned relative to the heavier simulators like VSE would be valuable.
My one request would be for a demo or screenshot or something on the front end before I register. I like to see what I'm getting into before I give you my email address and create a username.
Stickiness does seem to be a challenge. I love the idea of becoming "employees" of a company based on how you predict their stock. But beyond that, I'm not sure what else there is to do. I make a pick and wait to see what happens. What do I do in the meantime?
From a marketing perspective, this might be something to pitch to high schools with finance classes. It's a bit lighter than some of the more technical stock simulations but I could see teachers using this as an intro to investing and a way to engage students. I think understanding how you're positioned relative to the heavier simulators like VSE would be valuable.
My one request would be for a demo or screenshot or something on the front end before I register. I like to see what I'm getting into before I give you my email address and create a username.
Stickiness does seem to be a challenge. I love the idea of becoming "employees" of a company based on how you predict their stock. But beyond that, I'm not sure what else there is to do. I make a pick and wait to see what happens. What do I do in the meantime?
I saw the demo last night, too.
Sure there is a need for this, personally I have tried to do something like that using Google Finance and see how I perform over time, without actually buying anything.
I should say I didn't understand were the credibility of the site comes from. I mean why should a user trust the scores? or maybe I missed something there.
Thanks for the feedback. This is one of the main things we're trying to get right.
To answer your question about the scores, we are using collective intelligence to generate the stock ratings. Ideally the scores will be a kind of average opinion of everyone on the site.
One thing that makes StockYoyo different than other collective intelligence rating sites is that our ratings actually affect how you score when you pick the stock. We reward contrarian opinion and try to drive the ratings to zero. With enough users that means any non-zero rating should hopefully be a meaningful indicator of sentiment.
Unfortunately, we're not sure any of this is very clear and we're not entirely sure how to make it clear without users having to read our scoring FAQ. Better UI? Tool tips? walkthrough?
To answer your question about the scores, we are using collective intelligence to generate the stock ratings. Ideally the scores will be a kind of average opinion of everyone on the site.
One thing that makes StockYoyo different than other collective intelligence rating sites is that our ratings actually affect how you score when you pick the stock. We reward contrarian opinion and try to drive the ratings to zero. With enough users that means any non-zero rating should hopefully be a meaningful indicator of sentiment.
Unfortunately, we're not sure any of this is very clear and we're not entirely sure how to make it clear without users having to read our scoring FAQ. Better UI? Tool tips? walkthrough?
You aren't giving me enough information. When I view a company the only data that I get are the current price(how current?), and the value based on user votes.
The game mechanics are a good start, but you need to find the sweet spot between where you are and sites like updown.com.
I agree with an earlier commenter that putting things in terms of beating the S&P 500 is a good reference. Your current focus on up/down this week is a little short sited for most investors. I know you need to recurring traffic, but I think you may have abstracted too much from how investing decision are actually made.
If you had tokens that could be placed on stocks and won by beating the S&P; a weekly leader board of who made the most tokens, and positions in the company where awarded to who made the most/least tokens from that company.
The game mechanics are a good start, but you need to find the sweet spot between where you are and sites like updown.com.
I agree with an earlier commenter that putting things in terms of beating the S&P 500 is a good reference. Your current focus on up/down this week is a little short sited for most investors. I know you need to recurring traffic, but I think you may have abstracted too much from how investing decision are actually made.
If you had tokens that could be placed on stocks and won by beating the S&P; a weekly leader board of who made the most tokens, and positions in the company where awarded to who made the most/least tokens from that company.
The Motley Fool has a similar system called CAPS, except that their system is structured around outperforming the S&P 500 index. I like their approach a lot, because it reinforces the oft-forgotten idea that if you're losing to the S&P 500, then a passive investment strategy would have suited you better.
And, really, since your competition is The Motley Fool CAPS system, and you are several years behind them, you would be wise to take a look at how they've implemented their system to be conducive to learning about investing to help yourself differentiate. Off the bat, I can name several things:
- their "outperform"/"underperform" ratings are not absolute, but relative to S&P 500
- they provide easy access to SEC filings (quarterly and annual financial reports, etc), along with statistics (this is important if your goal is to encourage anything resembling security analysis)
- they have a wiki dedicated to translating financial jargon
- they periodically write articles introducing beginners to differing financial topics, such as fixed income investment, investing for retirement, investment philosophy, etc (i'll purposefully avoid commenting on the quality of any of their articles)
- they have a comprehensive stock screener (with a bug or two, in my experience, but still fairly worthwhile)
- their "outperform"/"underperform" ratings are not absolute, but relative to S&P 500
- they provide easy access to SEC filings (quarterly and annual financial reports, etc), along with statistics (this is important if your goal is to encourage anything resembling security analysis)
- they have a wiki dedicated to translating financial jargon
- they periodically write articles introducing beginners to differing financial topics, such as fixed income investment, investing for retirement, investment philosophy, etc (i'll purposefully avoid commenting on the quality of any of their articles)
- they have a comprehensive stock screener (with a bug or two, in my experience, but still fairly worthwhile)
This is the type of site that looks interesting to me, but not enough that I would register without a better understanding of how it works/what are the benefits. I think you need one of those quick video demonstrations, on the front page to better describe it and walk a new person through how it works.
Very interesting idea! Looks like you have a small graphical error right here: http://i.imgur.com/cfICi.png, too little spacing between "dots" and the text when there is a big headline. (I am using Chrome 11.0.672.2 dev on OSX)
Along the lines of display errors, you have a problem with your slides when a user has JavaScript disabled: http://i.imgur.com/lThGo.jpg. I think you could set slide.p2, slide.p3, and slide.p4 with display:none; initially in your css, as opposed to doing it via JavaScript as the page loads, to account for this.
Great idea - trying to get my feet wet with stocks again (Played with them briefly, with minor profits during school) and this seems like a fun way to give it a go.
Curious: what do you use for email notifications for signups and other transactions done on the site?
Curious: what do you use for email notifications for signups and other transactions done on the site?
Right now we're not doing anything special. We just send the emails from the server as we need to. A lot of the emails are set up as nightly jobs which we queue up in a DB before we send.
Ah, thanks for the heads up.
I asked because I'm the Product Manager of PostageApp, and we specialize on those sorts of emails. Let me know if you'd be interested in giving our app a whirl, it takes the headaches of deliverability out of your hair. :)
I asked because I'm the Product Manager of PostageApp, and we specialize on those sorts of emails. Let me know if you'd be interested in giving our app a whirl, it takes the headaches of deliverability out of your hair. :)
Saw the demo as well last night. Interesting concept and if it actually did hit the masses, I personally think it would have a sway on how you invest into the market. Great concept though!
Caught the presentation at HNDC last night; very good UI/UX and a decent idea to boot
StockYoyo is an investment website based on game mechanics and social networking principles to help people learn about investing.
We would love general feedback on the site, and we are particularly looking for feedback on the following things:
1) UI. We've recently made some changes and we'd like to know how the experience is. 2) The game mechanics/feedback loop. We're trying to make it stickier. 3) The rating system. Is it understandable/useful.
Of course those are just the things we know we need to know about. I'm sure we're missing stuff we should be thinking about so any other ideas would be great.