Can TTAGG Create Stock Market Alpha?

http://www.forbes.com/sites/petercohan/2011/10/18/can-ttagg-create-stock-market-alpha/

by tyrick • 15 years ago

55 39 15 years ago

fvryan11• 15 years ago

i'm one of the founders in case anyone has any questions or feedback, thanks!

tom_b• 15 years ago

Nice job - congrats. Is it difficult to prevent gaming the results? I'm curious about "pump and dump" approaches that exploit the social media data stream.

fvryan11• 15 years ago

It's an interesting question and we haven't had any problems so far. The good thing is that our data feeds are vast in terms of both size and reach across the social web, and we don't overly rely on any one feed.

bgraves• 15 years ago

What is your technology stack? I am particularly interested in the graphing library.

tyrick4• 15 years ago

Just hackin' away with PHP, jquery, and MySQL ^^ The graphing libraries can be found here http://www.highcharts.com/ They've been uber easy to integrate

wglb• 15 years ago

This looks quite fascinating. Like something Blue Ant would subscribe to.

But From the wilds of Fayetville, Arkansas? Please.

This looks like it might be disruptive, and in particular to an area that needs disruption.

tyrick4• 15 years ago

^^ Thanks - coming from the "wilds of Fayetteville, Arkansas"

fvryan11• 15 years ago

thanks for the support! :D

phodamentals2• 15 years ago

Needs disruption, Yes. More disruption to come---YES.

dbanx• 15 years ago

Hahaha, way to take the Recurly form and use it with Stripe. I did the same thing. I'm not too familiar with following the stock market, but good luck to you guys and the product looks great!

tyrick4• 15 years ago

^^ Thanks a ton! Ya, I have nothing but positive things to say about Stripe.

lincolnq• 15 years ago

It seems like you would make more money keeping this technology secret and using it yourself or convincing a single investor to use it and share the proceeds. Why are you trying to market it?

fvryan11• 15 years ago

haha we are definitely trading on it ourselves, but as entrepreneurs we don't have nearly enough capital to make the profits meaningful. Also we're really excited to be making affordable information tools for independent traders and have a lot more in the pipeline! :)

fr0sty2• 15 years ago

If everyone knows the secret it is not a secret anymore and the information becomes useless. If too many people are trading using the same algorithm the profit will be squeezed out and the data will be about worthless.

Find a Hedge Fund manager somewhere and get some money to put into the strategy. Of course you may find then that the simple act of investing larger sums will destroy your edge as your trades start having more significant market impact.

imkevingao• 15 years ago

have you gained returns on trades yet?

fvryan11• 15 years ago

definitely, a couple specific trades are mentioned in the article

peteretep2• 15 years ago

Unrelated, but part of a bunch of work my startup is doing is creating a set of new data sources around media coverage of big listed companies.

At the moment, we produce all the data retrospectively, but we could do it in real-time(ish). We think there's a strong chance that much of this information is tradeable, but we're very very busy doing the work that we sell to customers.

Anyone got any good ideas on how we go shopping for a customer for this data, given that we have no time? For some clients, we have many many data sources that aren't available publically(ish - we create the data from publically available data) going back several years for the marketing departments of some huge clients.

Presumably we need a quant who we trust with some time on their hands to play with it...

fvryan11• 15 years ago

A quant will definitely be important, especially one with a background in finance. However, you said the data wasn't available publicly, this could be a huge problem if you are planning on selling to the financial sector.

peteretep2• 15 years ago

The data is derived from publically available data.

asdf333• 15 years ago

as an investor, i do wonder "if its working well consistently, why wouldn't they keep it a secret?" So that makes me immediately suspicious as to why I'd want to use it if it wasn't working well enough for you to use yourself.

Just curious how you answer that question b/c if returns are good enough, you should be able to raise money for a fund w/ no problem.

fvryan11• 15 years ago

It's definitely a great question! The answer is simply that we didn't have enough investment capital for it to be meaningful, though we do still trade on it to build our track record to show investors. All of our angel investors came on board only after first using the product. But also we feel like we have priced it so that people can try it out fairly painlessly and decide for themselves if they find it valuable. Though we haven't had any unsubscribers to-date ;)

jackgavigan• 15 years ago

Why not go out and raise investment capital?

jriley• 15 years ago

Also consider managing a portfolio on www.covestor.com to both profit from your work and build a public track record.

antonb2011• 15 years ago

So, can we please separate facts from fiction? The Forbes article states that TTAGG's back-end downloads all photos that users post on their Twitter accounts and then tries to recognize whether the users are wearing what they claimed to have purchased in their Tweets. Is this really the case? How can you tell apart a pair of American Eagle jeans from a pair of Levi's?

fvryan11• 15 years ago

that starts to get to the core of our technology, so we're not really comfortable discussing it. That being said, in your example there are ways to derive the associated brand based on information alongside or attached to the photo.

hugh32• 15 years ago

If a sufficient amount of money starts using a product like this, what's to stop me gaming it?

Step 1: I go long on Nike

Step 2: I use my ten thousand twitter sock puppets to tweet about how they just bought an awesome new pair of Nike shoes

Step 3: I watch as all the TTAGG users plunge money into Nike.

Step 4: Profit!

fvryan11• 15 years ago

i can promise you that it wouldn't be a profitable endeavor for you, but we welcome you to give it a try^^

hugh32• 15 years ago

Well now, that's an assurance that it wouldn't work, but not an explanation of how.

I understand you don't want to give away all your secrets, but any hints? Any assurance that you really have worried about the problem that someone might try to manipulate your system?

chrisconley• 15 years ago

http://www.huffingtonpost.com/2011/01/11/50-cent-makes-87-mi...

aresant2• 15 years ago

If this data is as actionable as it seems don't piecemeal subscriptions, you will rob yourself long term by dealing with all the headaches of direct-to-consumer(ish) selling.

Revisions and accuracy on the data set and protecting that IP is where you're going to extract maximum value.

A good place to start calling would be Bloomberg - they have dialed in how to extract maximum profit out of business data.

They have a venture division that would be a perfect fit http://bloombergventures.com and can push you in the right direction if they pass.

fvryan11• 15 years ago

thanks for the share!

aresant2• 15 years ago

Worth checking out this article on StormPulse, they were in a similar position - incredible data - just needed to get their head around monetizing it properly:

http://gigaom.com/2011/09/20/how-stormpulse-made-more-money-...

jplewicke• 15 years ago

I work for a quantitative stock trading firm, and if this data is an effective predictor of stock returns you are underpricing it by a factor of about 4x to 25x. Most data providers charge at least $10,000/year, with the more effective ones charging in the six figures.

The primary thing a quantitative trader would want to see is a rigorous track record. Ideally this would be a "point in time" record where you record the information that would have been available as of a certain time in the past. If you don't have the data recorded for that, or it's for too short a time period, the next best thing would be to rerun your metric on all the historical tweets you can get your hands on.

Showing potential customers a mostly complete historical dataset of what you would have told them is a fairly common way of selling this sort of data. Don't show them anything too recent so that they need to buy the data from you. Firms have different investing processes, and so they often need to see a larger sample of data in order to know whether it fits well with how they invest.

Please feel free to contact me if you'd like to talk more about this -- my email is my handle at Google's mail service.

Can TTAGG Create Stock Market Alpha?

Related Stories