Walking off the television set of my last Monday’s appearance on Market Call – a Canadian television show – the host, which I would consider technology savvy, Michael Hainsworth asked why I developed the Model Price Facebook application? Before I could answer he said, “So you can get more clients!”
I wanted to scream No, no, no, no!
I simply stated to Michael that he should read my Nate Silver blog – here, on our similar business models. But as always, this question got my mind to wander whether people really get what I am try to do with Model Price. This is what the Internet is all about, iterations. So I will try another iteration of explaining my Model Price strategy.
Model Price is a service.
Google is a service. You have a question, you type the question into Google and through an index search – algorithm – Google finds content on the Internet that can answer your question. What does Google do? Provide a service. Model price provides a service. During the day when the equity markets are open, data changes. The stock price changes, earnings estimate change, each specific company’s balance sheet change, just to name a few. We collect these changes and more with an end of day computer run. In other words, we collect data, run this data through our algorithm and produce a graphical interface (charts) with end of day results and a history of this data going back for months and years. We have over 2,000 securities collected in our database. We have deposited this database on Facebook for people to review at any time. This is a service.
Outcomes is how we want to be measured.
We are about outcomes. Google is the most successful search engine because of outcomes for the people using the service. Outcomes are more important to me than page views, unique users, “Likes” or what I call traditional audience metrics. More specifically the outcomes we want are our users making money (or losing less), becoming wealthier.
I received this tweet from J.B. this week
This tweet gave me goose bumps! Why? Let’s have a look a Facebook’s model price chart to find out why.
Facebook with weekly price bars, EBV Lines (colored lines) and model price (dashed line)
J.B. gets it!
J.B illustrates to me in his tweet he has a trading strategy. He knows where his price objective is – EBV+6 or “@$36sh”. He knows support is EBV+5 or $24.32, “(stop loss)” and he knows he doesn’t have to do any trading until these two thresholds are achieved. Simple. J.B. is using company specific fundamentals (not technical analysis) and his probability of success is high – based on my opinion. If Facebook broke EBV+5 he has his stop loss in place in case this happens. There is no question in my mind that J.B. will be a wealthier man with this trading strategy – wealthier by making money if FB goes to EBV+6 or limits his losses with his stop loss at EBV+5. With data collection and daily end of day processing of model price, J.B. has actionable steps already in place before trading events have occurred.
If J.B. is wealthier by using model price he can help others in the community with their trading strategies as he obviously has quickly learned what our charts are trying to convey.
Community of Support
The reason we designed and placed our database on Facebook is to create a community of support. Facebook has built the software infrastructure to do this easily and I believe a perfect platform to easily create and support the model price community. So the community can make money together, using the model price charts as a point of reference for everybody to take their cue. Another important feature with Facebook is the ability to scale. The more people contributing ideas and support the more robust the community.
“So you can get more clients!”
Model Price isn’t about acquiring retail clients for me and my firm. I sincerely hope J.B. and others using model price are executing trades through a discount broker. Like Google, we are providing a service and if the outcome is not the best in the marketplace then people will not use our service. If we are providing outcomes, making investors wealthier, then the ancillary revenues will be enormous without affecting the service we are delivering – just like Google. Simple. I guess this is why change happens more easily outside the industry, because people don’t immediately expect vested interests at work.
As with all things on the Internet, hopefully I can learn from the community myself.
Model Price is about outcomes.