Academic

Wikinvest -- Creating Information or Creating Noise?

By Gordon Smith, Christine, Hurt, Vic Fleischer, Fred Tung, Lisa Fairfax, David Zaring

The NYT today describes a new site (well, not really new -- founded in 2006) started by three guys who like to be photographed in their college t-shirts and jeans to collect information wiki-style on publicly-held companies:  Wikinvest.  Users can post (anonymously or not) information about various companies, industries and general investment trends.  The site looks a little more Findlaw than Wikipedia, with authored articles by financial writers and bloggers.  Clicking on links for individual companies, there are Wikipedia-style entries with text on the company (separated into "neutral," "bears" and "bulls" tabs), as well as hard data and some pretty cool charts (that I assume are created from hard data).  There are footnotes and hyperlinks, like Wikipedia articles.  It actually looks pretty interesting for professors and reminds me to use it for class discussion when I need some backstory on a company.  Or an industry -- Wikinvest also has entries for industries, which is pretty cool.

So, in Securities Regulation today we talked about whether this site would create cheap, accessible information or whether it would create noise.  Of course, the founders say that like any other wiki, erroneous information will be deleted by more knowledgeable wiki users, wiki users will gain reputation rankings giving good contributors more deference, and that wiki users won't put on false information because that is against the law.  Well, that last bit is interesting.  So, I guess the founders believe that no one would participate in either insider trading (insiders trading before or after either leaking private information or submitting false information) or outside trading (outsiders doing the same thing). 

However, the founders seem to understand that there is some room for market manipulation -- if pump & dump operators were able to contribute false information on thinly traded stocks, for instance.  So, companies will only be covered on Wikinvest if they have a market capital of $100 million.  Now, there are plenty of places on the Internet where people could try to inject false information into the market -- comment sections of every newspaper site or other media portal, for instance.  Whether this creates a better or louder opportunity I guess is up for grabs.  But I guess it's been up for awhile, right?  Anyway.  Interesting stuff.

Full post as published by Conglomerate on February 09, 2009 (boomark / email).