Thursday, February 11, 2010

Social Media For Economists: Part 1 – Connecting to Intelligent Sources

This article is part of a 2-part series on social media, specifically targeted towards economists, strategists, and more broadly, investors. The objective is to educate people with an interest in economics and financial markets on how to best use Social Media websites.

The first article will explain how to tap into social media websites to obtain unique information and insights, and connect to individuals whose work you respect. The second article goes more into detail on how to publish your own work, as well as promoting both your work and your own personal brand.

What is Social Media?
Social Media, or interchangeably, social networking, is any web-based facility where people can connect and share information. Popular examples of this are Facebook, LinkedIn, Twitter, etc. In fact there’s a good chance you’ve come to this article through, or are reading it on a social media website.

Over the past decade social media and social networking capability on the Internet has developed from simple “Web 1.0” e.g. bulletin boards, email, to more advanced and innovative “Web 2.0” e.g. more advanced networking options “following”, “adding friends”, easy sharing of articles and websites, mobile access, etc. The sector continues to evolve and change, so it’s important that you stay up to date and experiment – not all social media websites are useful, and even the useful ones take a bit to make the most of them.

Why Should You Use it?
Social media is an effective way of tapping into smart minds and resources. In some ways it can be considered a valuable alternative to traditional media websites e.g. you can either scan all the headlines yourself or you can follow someone who picks up important news. It is also a source of news, with people publishing their own thoughts and analysis on their own blogs or blogging sites like Seeking Alpha.

In short, you can circumvent the traditional – arguably limiting – way of knowing, and tap into a new way of knowing. Blogs are an excellent example in that collectively they represent a diverse range of people with real expertise sharing their own thoughts and analysis – usually you wouldn’t gain access to this unless the author was considered important enough to be quoted in the media (or have the right friends) or if you were a client of theirs.

But of course, since there’s generally no editor or quality controller, you have to take the good with the bad. There are bloggers who are worth paying attention to, and then there are some that you can probably skip. It’s also true that you have to take their analysis with a grain of salt – check their references, and be mindful of unjustified assertions. You can also gain some confidence in their work by judging from the number of people that follow them. But now I’m jumping the gun…

Important Sites, and How to Make the Most of Them
Now that you’ve had a brief introduction to social media, it’s time to learn by doing. Below I’ve listed some of the key social media websites of relevance to economists and strategists, along with a paragraph on how to make the most of each site. I will link to my own profile on each site as an example – so sorry if this seems like a self-promotion drive, but my objective is first and foremost to educate you on social media. I’ve also given them a score out of 5, depending on my judgment of their usefulness for helping economists and investors tap into useful news and analysis.

Seeking Alpha – 5/5
Seeking Alpha is the first on the list, and is an absolute must to get involved in. There are wide ranges of people that publish articles on Seeking Alpha, on both broader macro-economic themes, as well as individual stocks. There are a number of high quality contributors on the site and it pays to join up and start following a few of your favorite authors. They send you daily updates of new articles, and this can be a good way of automatically tapping into that site.

Motley Fool CAPS – 3/5
This Motley Fool site is more stock focused, and allows you to participate in a stock picking game of sorts. The main value of this site is the blogs section. Here you can tap into a similar crowd as Seeking Alpha, albeit more of a stock-picking site with no quality control. The only vote of quality is posts that have a large amount of ‘recommendations’. It’s worth keeping on the radar, but definitely a distant second compared to Seeking Alpha. – 4/5
Hedgehogs is a new up and coming site, which has the potential to compete with Seeking Alpha, yet offering something quite unique and different. It is targeted more towards the hedge fund community and has a focus on creating apps and sharing programming/software. Definitely a must if you’ve got anything to do with hedgefunds, but also worth paying attention to generally – they aim to become something of a next Bloomberg. On the site you can connect with other like-minded individuals and follow their blogs and discussions.

Twitter – 3/5
If you’re not on Twitter yet then you should get on it right away. It’s definitely not the be-all and end-all but it is a useful way of connecting to streams of news and updates. Basically what you ought to do is find people worth listening to on there and start following them – they will post updates e.g. a one liner on what happened, and/or a link to the story. But it’s up to you to keep visiting the site and checking what people are doing/saying.

StockTwits – 4/5
Stock Twits is basically a Twitter app – or in other words Twitter for investors. This distinction puts it at a rank above Twitter on the relevancy scale. However it still has usability issues. Best to give it a try and see how it works for you.

Business Exchange – 5/5
Business Exchange is somewhat similar to Twitter, but I’d go out on a limb here and say that for economists/investors this is a much better, more useful tool. Basically people join up and share articles, then they and others can comment on (“react” to) articles. You can follow and be followed by people. It’s worth connecting to this site and simply monitoring the content channels (you can pick relevant topics to keep an eye on) for interesting news. You can also follow a few people that have added articles you like in hopes that they continue to do so.

Facebook – 2/5
Facebook is of marginal use, the main benefit is to connect to fan pages of companies, authors, bloggers on there that you’re interested in and you’ll be kept current with what they’re up to. It’s worthy of mention, but is probably more of a fun/social thing than an information source per se.

LinkedIn – 2/5
More of a professional networking tool than a research tool. Worth looking into from a professional standpoint, you can also link in to career groups and share links with people in your network.

Econolog – 4/5
Not a social media site per se but highly relevant – basically a real time directory of economics blogs. Definitely a must to monitor… indeed blogs should have their own category in this article, but this is probably a good proxy for all blogs in general. Another way to find and connect to blogs is generally via most of the previous sites e.g. Seeking Alpha, Twitter – most people link to their main blog.

Google Buzz - ?/5
Of course I should mention the new Google Buzz. So far it seems like an interesting tool; a mix of Facebook, Twitter, Google Reader, Gmail … all mashed into something that’s somewhat uncomfortably slotted into your trusty Gmail account. So far it seems to have promise, but I’ll need to keep using it for a bit before I can make an informed comment. But with most things in this area, the general advice line is to give it a try.

There are other sites out there that will offer similar functionality to those listed in this article; the main thing is to keep trying new things. Social media offers a new way of knowing, and if used wisely will offer you an often entertaining and fulfilling way of accessing insights and analysis while also interacting with your peers.

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