Some Great New Tools for Stock Pickers….

I wanted to write a note to all Stockopedia members to discuss the great new features that we are launching soon for Stock Pickers and how we’d like to help investors make more informed decisions going forward. The investment product we’ve been working on for the last year, Stockopedia Premium, is about to move into an invitation only testing (beta) period which we highly recommend everyone to sign up for at this link. Since generating ideas from data and quantitative screens is a new focus for us, I wanted to put down some thoughts about our journey and discuss how the site is going to evolve to everyone’s benefit going forward.

Some Background….

Before founding Stockopedia, I had found my best investing ideas in a variety of ways. Sometimes from bulletin boards, sometimes from tips, but mostly from stock screens and quantitative methods. Of course, once I had cottoned on to a new growth or value stock idea from whatever source, I would inevitably end up researching and discussing it for months on end on bulletin boards around the web. This led to a frustration with the tools that were on offer and an inkling of an idea that it could and should be done better.

From that frustration was born Stockopedia. Since day one, we have tried to make it easier for investors to share, discuss and discover new investment ideas. We’ve been proud to have won such an vibrant and educated community of almost 30,000 members and we feel confident that the calibre of discussion on Stockopedia is unmatched anywhere else in terms of its quality, focus on fundamental investing and the atmosphere of mutual respect. To give back to the Community, we have made big efforts to source content from the best bloggers and publishers around the Web and through our own popular CEO interview programme.

The Siren Song of Stories…

We have however long felt that there was still something missing, not just on Stockopedia but on investing portals across the Web.  All of us who love investing in the stock market appreciate the pull of a great story and that has always driven our desire to help stories propagate around the web. But the pull of a great story is just one part of investing, and taken on its own can occasionally be extremely dangerous.We all have two halves to our brain, the right side is extremely drawn to stories, emotions and intuitions, whereas the left side is drawn to analysis, objectivity and rational thinking. The trouble is that we can often think we are using the left side of our brain by discussing numbers and facts when actually we are actually just confirming a story that our right brain wants to believe is true. This is just one of a range of self defeating behavioural biases that we all have to contend with.

Personally I have had my share of successes and failures in the stock market. One which fell on both sides of the coin was RC Group – a very promising, and seemingly flying growth stock from 2005 through 2007. From a float price of something like 14p or so, it ran up to £1.40 on an astonishing compound growth record in biometric and RFID technologies, only to fall into legal wranglings, governance issues and stallling growth to eventually trickle down to today’s current price of 10p. Having exited nowhere near the peak price, I have ever since wondered how perhaps some of the financial and governance issues could have been better flagged to investors than just in random bulletin board posts. I was really looking for a tool that could make it clearer when I might be deluding myself and automate some of the analysis that I didn’t have time to do, but those tools just didn’t exist anywhere. If such a tool could also have helped me uncover other, better ideas with minimal friction, then I’d have been an extremely happy investor.

Building a Subscriber Product…

Over the last year at Stockopedia, we have pushed our development to focus on this flip side of investing – to create the toolkit for the other side of the brain. We have invested heavily in the very best fundamental data-set money can buy.  The team here and especially my business partner David, have done an extraordinary amount of digging to uncover indicators, screens and models based on academic research, famed investors practices and backtested results. From this literature we have built visual indicators and screening tools that are backed by fact rather than hearsay. Our goal is to deliver helpful tools (and the education to use those tools to self-directed investors) in order that they can make more informed (and hopefully better!) decisions.

We see these tools as the natural complement to the fundamentals-focused discussion and social platform that we’ve already created. We hope that they will be useful to everyone who uses the site, so please learn more about them here. We want to create something that will genuinely level the playing field between institutional and retail investors and in some way democratise a rigorous financial analysis toolkit. We are nowhere near this goal as yet, but this first first soft launch is a good yardstick of our intent. These tools will be a subscription product and we are aiming to generate enough support to push the coverage to a more pan-European (in 2012) and even wider coverage.  At some point in the next few months once our testing period is over, we will look to integrate the new site with the main Stockopedia portal and we hope this will be as painless as possible.

Further Plans…

We are well aware that many of our most dedicated supporters have a strong interest in oil and gas exploration. While the current version of the product is not yet focused on resource/asset plays, there is a huge amount of data & analysis on both oil & gas and mining companies that we could integrate into the platform – e.g. on inferred, proven and probable resources and so forth – and we would dearly love to do this. This is a goal that we aim to reach once we have built a solid subscription foundation for the core data across the whole market. I hope that you will understand the need for time to research and build out these extra features.

Getting Access…

The beta is invitation only, but we do expect to invite a few thousand on to the platform over the coming months. Please be patient for an invitation – we will be inviting our most loyal users and those who share their sign up links the most first – so if you want a quick invitation, please generate a link by entering your email on the beta homepage and sharing the short url generated on other networks or by email to people who might be interested. The beta will run free for a couple of months and during this time we do expect to find data errors, bugs and so on, so please give us as much feedback as possible.

Safe investing!

Ed Croft, CEO Stockopedia