Tags and Investing
Last night I was talking to Jenn’s friend Sam, a finance guy very knowledgeable about economies and investments. Sam mentioned how certain companies analyze the various “strong buy” “buy” “hold” “sell” ratings that firms apply to stocks. By looking at the history of how a stock has been rated by various firms, these companies can create profiles of the firms that are doing the rating.
When investment advisors rate stocks like this, they are essentially attaching a time-decaying tag to the stock. Similar to OPENSTUDIO’s “bubble up” tagging, these ratings accumulate and begin to paint an aggregate picture of the firm itself. Sam called this sort of profile the first derivative of the actual rating.
One of the key differences here is time. Current tag systems don’t look at time explicitely. At best, such as with del.icio.us, they typically just show a time stamp, and use the time information to detemine current trends and popularity.
In finance time is much more important. Winning and losing only happen with change in the market, which is of course only possible when there is some notion of time. An investment rating is decreasingly relevant as time goes on, with the actual relevance decay rate dependent on the industry, stock, firm, etc. An analyst can renew the rating by reissuing it, or change it. In comparison, tagging is static. Yes, we can change our tags, but the way we change them is not tracked. Aggregate tagging trends can reveal changes in the tagged object, as well as the tagging community. Encouraging change and tracking it is key.
Some ideas that fall out of this:
- tagging stocks
- time-decay tagging
rss
