10 things that The Social Network taught me

So, sorry about that last post.  Boring as hell, I know.  It was even boring for me to re-read, but I guess writing practice is writing practice, even if the subject matter is dry.  On to more interesting topics...

Christy and I got The Social Network out of RedBox about a week ago.  For those of you who don’t know, it’s the story of the founding of Facebook.  If you don’t know what Facebook is, well, Google it.  We’re both pretty nerdy and into anything technology related, and I’m also a sucker for learning how people get rich.  It turned out to be pretty good.  Even N’Sync guy didn’t do a bad job.  It also gave me a handful of insights that I thought might be of interest to the world.  Those insights are found below.  Note that this may not all make sense if you haven’t seen the movie, but I did try to explain things in places where I directly reference the film.

1.  Parasites are everywhere.  And it can pay to be a parasite.

Before I watched the movie, I had no idea that Sean Parker (one of the original Napster guys and involved in a lot of other Internet stuff) was involved in Facebook at all.  Apparently he was.  He was even president of the company for a while until he got caught with some drugs or something.  And why was he involved?  Why did he get 6% of the company? Why did he get an executive job?  I guess you could argue that he set them up with the venture capitalists.  I'm not sure whether or not that should be claimed as a benefit (see #2 below).  Did he do anything else substantive?  From what I saw, it looked like he bought a few lunches, took Zuckerberg out on the town a few times, and that was about the extent of it.  What he did do, though, was act important and confident, give Zuckerberg some friendly advice, and just hung around Facebook central all the time.  He made himself a part of the company simply by flirting with Mark Zuckerberg.  And for this, $2 billion.  Lesson: you don't have to add value in order to get someone to think that you add value.  

Of course, there's also the other side of that coin - when you come up with something big, there will ALWAYS be someone there wanting to help you, for a nominal fee.  If they really have help to give, great.  But don't let a parasite fool you into thinking that they are doing something valuable when all they are really doing is running game on you.

Fixing Google Finance

So yea, it’s been a while.  And this list is uber dry and boring.  It needs doing, though, so I may as well get a boring one that nobody wants to read out of the way after the masterfulness of my first list.  

Trying to use Google Finance for anything worthwhile has gotten irritating.  It’s to the point that I use it only because it’s there and doesn’t suck so badly that it’s completely unusable.  So this list is really just me venting.  It has become apparent to me that the people who put together Google finance (and yahoo finance too, for the most part) don’t ever actually use the tools that they’re implementing.  In an effort to make their product more useful (and make my investing life easier - I hate having to open up ThinkOrSwim any time I want to look at a decent chart), I present 10 things that Google Finance needs:

1.  More data.  

When I pull up a daily chart of Apple, the farthest back I can go is 12 months.  If I switch to a weekly chart, I can go back as far as the beginning of 2000.  Seriously?  You are Google, aren’t you supposed to gods of data?  I expect you to have market prices as far back as there have been markets.  When I pull up a chart of the S&P 500, I want to be able to see AT LEAST back to the beginning of the depression.  

Where time & sales data exists, Google should have it and it should be available for as long as possible.  And it should be available for download - I would really love to analyze a time & sales data set on something like the SPY.  Again, Google’s stated mission is to organize the world‘s information and make it universally accessible and useful.  When you take a day’s (or minute’s) worth of time and sales data and reduce it to a stick or line on a chart, you have just lost a LOT of information.  I want it back.

It would also be nice if you would maintain various historical economic data - GDP, CPI, bond yields, etc, and make it viewable in different formats (charts, tables, etc.)  It would be nice to lay a chart of the S&P 500 on top of a chart of GDP, inflation, and bond yields from the depression in order to see how various sectors behaved then.

At the end of the day, I simply want access to every piece of historical (i.e., prior to right this second) financial information available.  And I want to be able to format it, view it from different angles, analyze it, whatever.

2.   Bigger list of standard market indicators

How to I look up the VIX in google finance?  No, VXX or any one of the daily tracking ETFs doesn’t count - the all do a miserable job of actually tracking the VIX.  As of yet, I’m unable to find it.  Nor am I able to find the US Dollar index.  There are lots of little indicators like this that make any major finance site incomplete.  Google needs to add them ASAP.

3.  More and better chart tools

Stop trying to copy Yahoo and Marketwatch finance pages - theirs suck too.  Go download the ThinkOrSwim client.  Copy that.  Specifically, I need:

• Fibonacci retracements - I pick a high and low price, you draw lines at the “Fibonacci levels” (generally 23.6%, 38.2%, 50%, 61.8%, 78.6%) between those 2 prices.
• Chart expansion - I need to be able to increase the “margins” of the chart.  As in, more clear space above/below/to the left of the price data so that I can extrapolate price movements into the future.
• Live updating of the current candlestick - I don’t know why, but on candlestick charts all I see is the last completed candlestick, not the one in progress.  That’s dumb.  Today’s information has meaning too, and it can’t just be ascertained by going to a different time level.
• Ability to draw & annotate on charts - Mostly I want to be able to draw arbitrary lines and make arbitrary notes on a chart.  It’s nice to be able to check a chart pattern that you think you see by putting an actual line on the page.
• Higher candlestick density - apparently you have implemented a maximum candlestick density.  Whatever that is, it needs to be higher.  The more price data I can get on 1 sheet, the better, even if it means that I lose the the ability to actually see the inside of a given candlestick.
• Store drawings on a per-security basis - All of the above should be saved when I change securities.  If I draw a bunch of crap on the AAPL security, then go look at GOOG, when I come back to AAPL I’d like all of my previous drawings to still be there.
• Allow arithmetic charts  - This one is pretty easy to explain: given stocks A&B I would like to be able to chart A+B, A-B, A/B, A*B.  Of everything in this post, this is probably the highest payoff/lowest work implementation available.
• Market Depth - Looking at the daily volume of a given security is nice.  What’s better, though, is to know what the volume has been at each price point over some arbitrary length of time.  The chart winds up looking something like this:

Notice the horizontal bars on the left.  That’s what I want.

4.  Stock screener improvements

I like the idea of a stock screener.  And I even like the basic way that Google has implemented it.  But it still needs some improvements.  Such as:

• More granularity in sector selection - Sometimes I want to look up investment banks.  But the most detailed I can get is “Finance”. That sort of thing is all over the place.  Finance means a lot of things.  So does Technology.  What if I wanted miners of precious metals?  How do I get that screen?  I can’t.  Maybe the solution is to make it a searchable thing instead of drop-list based, I don’t know.  What I do know is that what’s there isn’t real useful.
• Filter by technical indicator or indicator formula - Maybe I want every security whose 20 day moving average is above its 50 day moving average.  That’s a pretty useful thing to look at in a stock chart, but there is no way to filter all of those securities out.  In fact, there are lots of times that sort of thing happens.  A user might want stocks trading close to their 52 week high or 52 week low.  You can imagine the permutations, especially if you allow criteria based on some sort of custom indicator (see #5 below).
• Make it a “security screener” - This is pretty simple.  Add fixed income and preferred stocks to the world of things being screened.  I would LOVE to be able to search the world of preferred stocks.  I don’t know of a good way to do it right now.
• Allow criteria (sectors especially) to be excluded - Right now, it appears that every additional selection criteria is ANDed with the previous ones.  I would like for any given criteria to be NOTed before it’s ANDed.  I.e., I want to search all stocks, but I refuse to invest in banks.  So I need to be able to add banks as a criteria to exclude from the search.  

5.  Build your own indicator

There are a gazillion technical and fundamental indicators out there.  How great would it be for Finance to allow a user to make up new ones?  Or to just build known ones that Google hasn’t implemented yet?  You could even build some sort of indicator repository to allow users to submit the indicators that they’ve built.  They might not all submit their new ones, but people would almost certainly build the well known ones and submit them to the repository.  It seems like all this would take would be the building of a rudimentary sort of scripting language that gave the user access to company data, price & volume data, and other technical indicators.  Even better would be if a user could include things like Google Trends data.  It might be a little bit more of an undertaking than some of the stuff I’ve mentioned already, but it would be worth it.

6.  Build your own Algo

This is sorta similar to #5, but it adds in the ability to place pretend trades (automated or manual) in the past and to see how they work on a pretend pile of money.  It could be built on the same scripting engine as #5,  just with a few added tweaks.  

7.  Futures and bonds quotes

It kinda sucks that I have to go to another website in order to see off-hours quotes for basic things like S&P500 futures or gold futures.  And yea, I know, it’s a pain in the ass to get bond quotes in general.  Investment banks have a vested interest in keeping those opaque so that they can screw investors.  Who better than Google to make it more transparent?  I don’t really have any suggestions on how to do this one, but I know it would be useful.

8.  Theoretical option pricing & spread modeling

Option quotes are nice; I’m glad that you finally have those.  What would be even better, though, is if I could see a picture of what the price of an option might do over time given a change in the price of the underlying security.  Or a change in volatility or interest rates.  Once you can do that, it won’t be a huge leap to allow a user to define an option strategy (spread, straddle, butterfly, whatever) and show the same sort of picture.  This is another piece that you need to steal from ThinkOrSwim - download it and play with the Analyze tab.  That’s what we’re looking for.

9.  Build your own forecast model

Amateur investors like myself don’t have a quick and easy way to build a forecast set of financial statements.  It would be great if you had a basic spreadsheet that would allow a user to define whatever basic form they want their forecast to take, and then have Finance grab all of the relevant financial statement info and dump it into the model that the user has created.  I can envision a lot of complications with this, but nothing that can’t be worked around.  The basic idea is that I don’t want to have to create a brand new spreadsheet every time I want to forecast a company’s financial statements.  I want to have some basic form that will let me stick in a ticker symbol and a few relevant pieces of information (say, sales growth rate) and then just create the spreadsheet for me.

10.  Buy the Billion Price Project

A few weeks ago, the Billion Price Project http://bpp.mit.edu/ was in the news a lot.  In a nutshell, it’s an MIT project that tracks global prices of, well, everything.  In as close to real time as possible.  From that, they were able to extract a bunch of useful economic data, particularly a real (read: not government filtered) inflation number.  It has since been shut down, supposedly due to resource constraints.  Well, Google has resources.  This is another one of those things that seems to marry perfectly with the Google mission.  The amount of global economic efficiency that could be gained from making this kind of information free and globally available is staggering.  Companies (especially small ones without huge resources to track this sort of thing themselves) could watch prices of inputs, looking for intelligent places to buy and/or hedge future price increases of those inputs.  Sellers could tweak production better.  And the public could get a picture of an important piece of the economy without government filters.