Importance of Innovation in Finance & BarCampBank

“Progress is not the mere correction of evils. Progress is the constant replacing of the best there is with something still better.” -Edward Filene

Two years ago, when we were organizing the first BarCampBank in the US, many people found it hard to believe that banks & credit unions could a place for meaningful grassroots innovation. Even crazier was the idea of organizing an unconference to begin bringing open source, transparency, identity, and community into the very closed world of banking & finance.

Since then the BarCampBank idea has turned into a movement. There have been over 14 events all over the world, and many of the ideas generated are beginning to turn into action.

To me, the global financial system is a platform that exists to “create more value than it captures”. Tim explained this in his Work on Stuff that Matters post, saying:

“A bank that loans money to a small business sees that business grow, perhaps borrow more money, hire employees who make deposits and take out loans, and so on. The power of this cycle to lift people out of poverty has been demonstrated by microfinance institutions like the Grameen Bank. Grameen is clearly focused on creating more value than they capture; not so the like of Fannie Mae and Freddy Mac, or WaMu, or many of the other failed financial institutions involved in the current financial meltdown.”

There has never been a more important time to bring meaningful innovation into the financial system, and there has never been more opportunity for our community to make it happen.

The next event is occurring this weekend (April 25-26, 2009) on Treasure Island in San Francisco.

After that, the following events are planned:

• BarCampBankVegas is set for May 2, 2009.
• BarCampBankCharleston2 is set for June 13, 2009
• BarCampBankGermany is set for October 23-25, 2009

MONEY:TECH 2009 Up and Running

I am happy to announce that the Money:Tech site is up and running. We've been working on the program for a while. We are looking for people in both the Finance and Technology communities to participate, as attendees and presenters. The last Money:Tech was a success and the next one promises even more.

Money:Tech 2009, will take place February 4-6, 2009 in New York. We are planning a day for workshops and 2 days for the conference itself. We decided to include a workshop day for those out there that wanted to experience and work with some of the latest techniques in gathering, acquiring, and using data from the Internet. More information on workshops will appear in the very near future.

Money:Tech will be loosely organized around these ideas:

• Big Data: Using the Internet to find and harvest new and useful data sets to extract value on companies, industries, sectors


• Visualization/Analytics: Tools, techniques, and applications that make it easier to spot useful patterns, trends, and information


• Research is Everywhere: Who are the new research players and what are they offering?


• Prediction Markets: The pluses and minuses of prediction markets—and how people are using them as part of their investment process


• Collective Intelligence: Drawing inferences, trends, and decisions from the crowd via tools, techniques, web sites, and applications

A few questions for you first:

Do you have an interesting topic, idea, product, or an application of existing tools and techniques that this marketplace needs to know?
Are you building the next Majestic Research or the next Wikinvest?
Are you consuming RSS feeds to power your insight into news and markets?
Are you scraping data from Amazon, Wal-Mart, and others using Kapow, Connotate, Dapper , or a host of other tools, to power you channel checking abilities?
Are you feeding you information needs through iGoogle, Yahoo! Pipes, Google Finance, & Yahoo! Finance?
Are you using Gerson Lehman, Coleman Research, or Primary Insight to supplement your own investment ideas and themes?

If you answered yes to any of these questions or you are intrigued by the prospects, then this is the conference for you. This is for people who like to Think, Speak, & Do.

You can make presentation submissions here

I'll be blogging more about Money:Tech in the near future. Look for upcoming speaker announcements and sessions. You'll be able to following the action here as well as Program Chair Paul Kedrosky's blog

My thanks to the team at O'Reilly for getting this site going. I would also like to thank our Money:Tech Advisory Board, Bill Janeway, Roger Ehrenberg, David Leinweber, Cathleen Rittereiser and of course Tim O'Reilly, for their previous and continuous input.

Tools for the Equity Research Toolbox

When I was a kid, I would always remember commercials for a school called Apex Tech. One of their taglines was "look over the professional tools you get to keep when you finish your training". It's a lot like that today. Google News, along with Yahoo! Pipes are two tools that analysts, traders, and salespeople are discovering and using.

Today the NYTimes pointed to the slow growth of ad revenue as a disappointment to Google on it's news site see - "At Google, Slow Growth in News Site"

In digging through the article I saw this quote that really outlines what Google News is about for people like me, those of us that live in the news.

Google executives defend the news site, saying traffic is not a paramount goal. Google News, they say, helps the company produce better search results and helps users find news sources that they might not know about otherwise.

“For us, news is about search and helping people find information,” said Marissa Mayer, Google’s vice president for search and user experience, who oversees Google News.

This idea of finding "other" news sources is the key.

One of the paramount abilities of a good analyst is to spot trends early and realize their potential impact on a company or industry. What analysts are usually searching for is any hint of weakness or strength in competitive advantage. Sometimes the smallest trends start in the local newspapers. Google News makes locating those topics and stories much easier.

If you pair Google News with the enhanced filtering ability of Yahoo! Pipes, and your favorite feed reader; you can create some worthwhile tools that help your trend seeking abilities.

I am a big fan of some of the ideas behind Microtrends by Mark Penn. Mark is known for spotting the 'soccer moms' impact on the 1996 Clinton campaign. Basically his idea centers around identifying trends that begin when 1% of a population begins to adopt. So if 1% of the US population (3 million people) starts saying something you need to pay attention. The trick as an analyst is to identify topics that may be on their way to that benchmark.

My current interest is in the debate on energy policy as it relates to Oil exploration. What I'm really concerned with is the indirect results and unintended consequences of a change in the current energy policy. Any change from today's policy will cause all companies to respond. This will allow me to set up a group of scenarios which I can watch and be prepared for as a trend develops. A cardinal rule in investment research is to make sure you have as much relevant data as possible. You never want to be blindsided. You can discount information at your own discretion -- but being ignorant is hazardous to your portfolio.

Here is an example I've been working on as part of a wider range of investment ideas on Oil.

My first approach was to set up a search in Google News that highlighted anytime OIL was in the title of a story. You can do that with the 'allintitle' operator and since I wanted US based sources I added the 'location' operator with USA as the source- it looks like this in the Google search window.
http://news.google.com/news?hl=en&ned=us&q=allintitle:oil+location:USA&ie=UTF-8&scoring=n

To see more useful operators check out the Google Cheat Sheet

There are choices on the page to make this search into an RSS feed. Clicking a link on the page will create a feed url in either RSS 2.0 or Atom. You can then take that feed and do further refining in Yahoo! Pipes. I like to create a broad search from Google News and then apply a layer of filters in Pipes for key terms that I think are important. Once I have configured Pipes to my liking it becomes a feed for my RSS reader. I also created a pipe that looks at the opinion and editorial feeds from certain newspapers. Those in the analyst community will recognize this technique as a kin to using Google alerts. Using RSS is the better mousetrap and it doesn't clog you mailbox.

So what did I find from my pipes that I think is interesting, below are some examples:

175 in House Sign Westmoreland Pledge to Vote to Increase Oil Production
Oil prices put Plastic industry under pressure
Point/Counterpoint: Oil drilling
Oil drilling question looms as election issue
Calls for crack down on oil speculation increase
McCain's policies will not help oil crisis, curb climate change

With two candidates on opposite sides of the issue. Stories and opinion pages are pointing to the key arguments that each side will make. Two of the resident themes are drill now, and oil speculation. Being apolitical here, if there is one thing you can count on -- somewhere along the line-- both of these candidates are going to introduce some type of energy legislation as part of their platforms. The sentiment in the stories, on either side, is just too high for either campaign to ignore as a differentiating issue. With further enhancement, I can track these issues on a regular basis without having to subscribe to every newspaper RSS feed. And as a side benefit to the newspapers involved, to get the full story, I need to go their site - display advertising anyone?

Data on the Web: VGChartz vs. NPD

After writing my first post, Equity Research in the Age of Web 2.0, I received a lot of comments asking really good questions. Most of the questions from readers asked about real world examples. So here's a taste.

In the world of securities research, in general, we talk about consensus sources. These are sources that everyone looks to as an arbiter of what may be happening in a market or industry. In the macro economic world, figures released by the US government, (measures like labor statistics or GDP) are used by the market as a whole to judge where the economy may be headed and where it has been. In certain industries, independent benchmarks are used to define the prospects of an industry or the individual performance of the firms involved. A great example of this is the NPD Group.

The NPD Group, provides pay services that collect information from various retailers and then in turn creates a measure of sales for many product categories. Usually the reports are done on a monthly basis coming out about 2 weeks after the previous months close. I am pretty familiar with their reports and most equity analysts and the market use them as the benchmark. Usually an analyst will write a report in which they predict sales for a particular company in relation to the data provided by NPD. The differences in an equity analyst's view of NPD and his own projection usually leads to an upside or downside surprise in a equity's price, once the NPD reports are published and received by the market.

For the video game sector, NPD produces the benchmark measures for North American game and console sales. Analysts like Michael Pachter of Wedbush Morgan, and Colin Sebastian of Lazard, create, on a regular basis their monthly forecasts of where NPD will come in at. Over the last couple of years a new entrant has entered the picture with different aims from NPD; enter VGChartz. By all accounts this newcomer is causing a headache for NPD and their for pay service.

VGchartz uses a similar methodology as NPD, in trending and forecasting game sales through representative samples.
Here is a excerpt from their About Us page.

"With a growing team of analysts, over ten years of experience and with over twenty years of historical data at our disposal, VG Chartz should be seen as a very powerful prediction tool for industry and casual user alike in looking ahead to the future market and making educated and informed predictions. Using our powerful and proprietary graphing and analysis tools, users can query the extensive sales database and compare the performance of hardware and software sales over time between different formats, genres, titles and manufacturers."

The main difference between NPD & VGChartz is that, VGChartz is a user-based community of video game enthusiasts/experts and NPD is a market research company. Their business models also differ, NPD is a for-pay service and VGChartz looks to be supported mostly by paid advertising. While VGChartz makes their North American data available on a weekly basis along with data from Japan and Europe. NPD is focused on North America, and their data is released monthly.

So if you're an investor interested in this sector or an analyst -- the first question you should ask yourself "is the data from VGChartz good?" My answer is, after looking at and using VGChartz data for the last two years, it's quality. But please in the Age of Web 2.0 form your own opinion.
Here are my reasons:

• The data is weekly as opposed to monthly -- time is a big advantage. (I saw Sony's changing future thanks to VGChartz much quicker than if I'd waited for monthly numbers)


• It is the only place to get as close as possible to worldwide figures on console & game sales.


• The best part of using or working with VGChartz data is that they give you their biases upfront along with a comparison of their numbers against NPD and key analysts like Michael Pachter.


• There is community that has arisen around the numbers; that is willing to have an open exchange about the short comings, and methodologies in VGChartz's multiple forums. You really don't get that with NPD.

It has to drive NPD nuts that a site like VGChartz can create a presence and provide high quality information with a completely different business model. I am sure in the NPD mindset, the thought of an outsider competing with them in this space was completely unanticipated. This was a theme that was echoed at our last Money:Tech. On one hand we had Reuters' Devin Wenig talking to Tim O'Reilly saying he didn't "... see direct competition from consumer media (including Google), arguing that professionals need richer, more curated information sources." And on the other hand, we had Sean Park of Six Paradigm talking about grabbing high quality useful data, as a buy sider, from consumer-oriented services like Yahoo! Finance and Google.

The one thing you can count on is this, smart professionals and investors will always look to high quality data sources that are leading indicators for consensus. If I can find a piece of data, or a source that is a good predictor for what a benchmark will do, I will use it no matter where it comes from. Time and proven results are the final judge. If it happens to be free, so much the better.

Equity Research in the Age of Web 2.0

As a new blogger to Radar and the program co-chair for Money:Tech 2009, I thought I'd introduce myself along with a topic we plan to present at the conference.

After spending many years on Wall Street watching the buy side (investing institutions) and working with the sell side (investment banks); all I can say is that I am excited with what the future holds. The Internet is quickly becoming 'the' vast store house of data, research and commentary that I hoped it would. If you think the Internet is for message board jockeys, blogs for late nights in pajamas, and social media for dating; you are missing point. If you want to add to your company and industry analysis, as well as, your investment process, you need to be an interactive user of the Internet.

So why are we, "the professionals", turning to the Internet? Or more specifically; why are we turning to web sites, blogs and social media for investment research, data and commentary? Well I believe there are a few reasons.

Just about every public company has some type of presence on the Internet. In certain domains, enthusiasts and experts are better informed than most analysts on the actual products, goods or services a company may provide. And they are sharing this knowledge and information with each other in open forums. And if you decide to graduate from lurker to participant the gains are even greater. An informed investment professional, that knows his tickers and sectors, can quickly digest this information into his investment process, just like his phone calls with a Gerson Lehman or Coleman Research expert. This type of high quality information can be found if you know where and how to look.

The emergence of low cost publishing tools, cheap web hosting, and various ways to monetize knowledge is another trend that can put some people on the same level as a CNBC anchor and others on equal footing with a top ranked analyst. Just think of my well known blogger friends like Money:Tech Chair Paul Kedrosky, Barry Ritholtz, Nouriel Roubini, and Roger Ehrenberg. Their collective readership and influence is greater than most sell side analysts.

The economics and dwindling company coverage of most sell side research shops has forced the buy side to scale and employ a do-it-yourself ethic. Your typical buy side analyst needs a place to turn for leads and information, especially when switching sectors and industries. Those places are quickly becoming SeekingAlpha, Wikipedia, LinkedIn and Facebook.

And the biggest reason of all; the established sources of main stream financial news and data are ubiquitous. Everyone on the buy side and sell side has Bloomberg, Reuters, and Dow Jones. And if everyone knows everything at the same time what advantage is that?

So where are we headed?

We are headed to a place where the tools, practices and techniques are starting to emerge. It's a place where anyone with a need and drive can learn to scrape data, do their own automated channel checks, while benchmarking and creating reference data. Have an idea; model it yourself, grab the data from Amazon, benchmark it against Yahoo Finance, and set up your filters in Google Reader for stories or articles related to your themes.

The key is to meld the old with the new. Mixing your custom new found data with established sources from your vendors to provide leading edge mashups that help you complete or flesh out a company's position within the competing forces - think Michael Porter on steroids.

Researching during the age of Web 2.0 doesn't mean blindly following rumors on a web site -- that way leads to madness & ruin. You need to think more like Ben Graham in the early days of modern Wall Street when speculation was the name of the game. Graham was able to find high quality sources of information that others thought to be a waste of time, and he put them to good use.

The same can be said for the tools at your disposal in the Web 2.0 era. Put them to good use and you will be rewarded.

New Release 2.0 on Money 2.0

One year ago, we published an issue of Release 2.0 entitled "When Markets Collide" (download a PDF), in which we considered what Wall Street and Web 2.0 might have to teach one another. Quite a bit, it turned out: the key parallels we uncovered include latency (both have to do their jobs more or less instantly), connectivity (it's the liquidity of Web 2.0), sensors and actuators (and how to use them), and reputation (stockbrokers are no longer curators -- they're rated).

So it's a ripe time to consider the status of the relationship. What's new? What's changed? The amount of financial data available publicly is astonishing. That doesn't mean it's all useful. There's plenty of data out there, but it's plenty confusing. You can't extract alpha until you understand what you're looking at. As Michael Simonsen, president and CEO of Altos Research, puts it, "free data on the internet is a mess."

If anyone doubts that financial markets and technology markets are deeply intertwined, consider this: the same day that JPMorgan Chase revealed its "purchase" of Bear Stearns, a Gartner Group analyst released a report showing that "the financial services industry continued to lead all vertical markets in server revenue, as it accounted for 25.3 percent of worldwide server revenue in 2007." As goes one set of markets, so goes the other.

In this issue of Release 2.0, we consider the Wall Street/Web 2.0 mashup from a number of angles. We talk to Paul Kedrosky, chair of our Money:Tech conference and an influential blogger on the topic (as well as others), about why some on Wall Street hate Web 2.0 -- and what Web 2.0 can do to infiltrate Wall Street nonetheless. Entrepreneur Marc Hedlund, now chief product officer for OATV-funded personal finance startup Wesabe, examines what happens when hidden data gets surfaced. Cathleen Rittereiser talks to hedge fund managers to discover what they want from Web 2.0 -- and what they're actually getting. Longtime Radar contributor Nathan Torkington digs deep into prediction markets and spells out both how to manage them and what companies can gain from implementing them.

It's a truism that alpha lasts longest when it's hidden. That may have been true in the past, but the growing use of Web 2.0 tools means that less data will stay hidden, and what's hidden will stay hidden for a shorter period of time. As James Altucher of Stockpickr said at Money:Tech, "When it comes to data nowadays, closed source is a myth."

You can purchase the current issue of Release 2.0 or, even better, subscribe to the newsletter.

The iPhone wins friends and influences people

At O'Reilly conferences like this week's Money:Tech, where businesspeople outnumber developers, the tool of choice to enable continuous partial attention is a mobile device, not a laptop. To my surprise, roughly 80% of my Money:Tech rowmates had iPhones in hand. I expected New Yorkers to be a Blackberry crowd, but it looks like Tim was on to something when he predicted that the iPhone will beat the Blackberry.

A few more recent random data points about Apple's momentum:

Radarite Nat Torkington reports that developer Layton Duncan of Polar Bear Farm, a trailblazing developer of cool native iPhone applications, was high on his list of "most interesting people I met at Kiwi Foo."

After a few weeks with his new iPhone, Grant McCracken was surprised to realize that he'd probably switch to the Mac when he got his next computer. He wants the iPhone's elegant, user-friendly design on his laptop, too.

Longtime ace coder and Foo Duncan Davidson (who moonlights as the photographer at our conferences) said he'd been getting a noticeable increase in requests to develop for OS X. His corporate clients are investing in the Mac platform.

On their own, none of these anecdotes is wildly surprising. Taken together, especially when they all pop up in the course of 36 hours, they point to continued growth in Mac market share.

Reuters CEO sees "semantic web" in its future

At Money:Tech yesterday, I did an on-stage interview with Devin Wenig, the charismatic CEO-to-be of Reuters (following the still-not completed merger with Thomson). Devin highlighted what he considers two big trends hitting financial (and other professional) data:

1. The impact of consumer media on professional media. As young people who grew up on the web hit the trading floor, they aren't going to be satisfied with text. Reuters needs to combine text, video, photos, internet and mobile, into a rich, interactive information flow. However, he doesn't see direct competition from consumer media (including Google), arguing that professionals need richer, more curated information sources.

2. The end of benefits from decreasing the time it takes for news to hit the market. He describes the quest for zero latency in news, from the telegraph and early stock tickers and the news business that Reuters pioneered through today's electronic trading systems. (Dale Dougherty wrote about this yesterday, in a story about the history of the Associated Press.) As we reach the end of that trend, with information disseminated instantly to the market via the internet, he increasingly sees Reuters' job to be making connections, going from news to insight. He sees semantic markup to make it easier to follow paths of meaning through the data as an important part of Reuters' future.

Devin's point about the semantic web was thought-provoking. Ultimately, Reuters' news is the raw material for analysis and application by investors and downstream news organizations. Adding metadata to make that job of analysis easier for those building additional value on top of your product is a really interesting way to view the publishing opportunity. If you don't think of what you produce as the "final product" but rather as a step in an information pipeline, what do you do differently to add value for downstream consumers? In Reuters' case, Devin thinks you add hooks to make your information more programmable. This is a really important insight, and one I'm going to be chewing on for some time.

That's a really good case for the Semantic Web, and one that I hadn't understood before. It's not about having end users add semantics for the love of it. That's just overhead, which is why I've always argued against it, preferring the kind of implicit semantics that come from applications that harness user self-interest. But professional publishers definitely have an incentive to add semantics if their ultimate consumer is not just reading what they produce, but processing it in increasingly sophisticated ways.

But even if Devin is right about one role of a publisher being to add value via metadata, I don't think he should discount the statistical, computer-aided curation that has proven so powerful on the consumer internet. (Curation is that part of the publisher's job that consists of choosing and arranging the content that is presented to the ultimate consumer -- reading the slushpile, if you will, so that others don't have to, and making sure that the most important material gets its day in the sun.)

Explicit semantic markup has thus far not proven to be anywhere near as powerful as techniques for mining implicit semantics, or the design of applications in which more implicit semantics are created by users simply by "living as and where they live." (Facebook's "social graph" is the latest example of this kind of implicit semantic application.) Much success on the consumer internet has resulted from innovations in curation. After all, PageRank is a kind of automated curation via collective intelligence, as is Flickr's interestingness algorithm, user voting on slashdot and digg stories, and even community editing of Wikipedia.

Devin is completely right, though, about consumer media changing expectations for professional media. I see a lot of future upset in enterprise software as well as in media, as consumer phenomena like mashups and social networking change ease-of-use expectations of applications like CRM and business reporting. But it seems to me that mainstream media needs to learn not just about multimedia, but also about new sources of information.

A huge part of the generational change is a change in expectations of transparency, informality, and sources of authority. So when Devin says that Google isn't terribly useful for professional uses like financial research, I think he misses just how much authority bloggers are getting as reliable news sources, and how people are using tools like iGoogle to pull together targeted RSS data feeds. Raw Google results may be less useful than Reuters-filtered results, but how about community or expert-curated Google results? Just as Reuters' customers are adding value to the Reuters data stream, they are capable of adding value to the Google data stream. And there are increasingly powerful tools for managing that stream.

What I think does ultimately matter is the ability of professional media to build specialized interfaces and vertical data stores that are suited to their niche, hopefully harnessing data and services from the consumer internet, and mashing them up with specialized, perhaps private, data stores. Put that together with metadata for programmable re-use, and you may really have something.

On the end of timing arbitrage due to zero latency in information distribution, I have to disagree with Devin. There's still a huge amount of information that never hits the market because people aren't paying attention to the right things. David Leinweber, who spoke at the conference yesterday, gave a great example, of a huge price move in the stock of a pharmaceutical company as a result of news of successful clinical trials for a cancer vaccine. Every single news story on the subject resulted from the company's press release, yet there was information available on the web months in advance of the story. Leinwebber's point: it isn't about speeding up news distribution, but about getting better access to sources of the news. As he said: "You have to get the news before the news people get there."

Even in areas like company financials, the bread and butter of equity analysis, is there any reason why earnings are still reported only quarterly? There may one day be a company that breaks ranks, and shows its data in real-time (as it is increasingly coming to company executives.) The expectation of radical transparency may one day reach even into this relic of the 19th century.

I also think there's a huge opportunity to get to data sooner via the sensor revolution. When phones report location (disclosure: O'Reilly AlphaTech Ventures investment), when phones listen to ambient sound, when credit cards report spending patterns (disclosure: OATV investment), when cars report their miles traveled, when we're increasingly turning every device into a sensor for the global brain, there will be more and more sources of data to be mined.

And yes, we'll need humans (at least for a while) as the last mile to extract meaning from all that data. But we'll want those humans to be augmented with tools that notice patterns and exceptions as they happen, not just after the "news" hits.

Money:Tech Day 2: Best Lines of the Day [MoneyTech]

Like yesterday, the second day of Money:Tech was stuffed with early signals on everything from using website visits to predict the unemployment rate to the emerging market for catastrophe bonds.

Here are just a few of the choice lines today:

Michael Stonebraker, Streambase, on why fast-moving financial firms must keep their data in memory, not on a hard disc: "The minute you store the data, you lose."

Devin Wenig, Reuters, on how the speed problem may be solved: "Latency is not the burning issue in our industry anymore." To which Tim O'Reilly responded, "there is a lot of room to collect the data earlier," before that latency period even starts.

Martin Wattenberg, IBM, on what he's learned painting the future of data visualization: "There's more to life than AI and fancy machine learning."

Brian O'Keefe, Panopticon, on the limits of software: "You can't ask questions in Outlook."

Henry Blodgett, Silicon Alley Insider, on an eternal truth in equity research: "The only research that's valuable is the stuff nobody else has."

Nouriel Roubini, RGE Monitor, describing his business model: "We filter what's available for free on the Web and people pay us for that."

Cathleen Rittereiser, Alternative Asset Management, on how hedge funds persevere: "It's better to be wrong together than to be wrong alone."

And I didn't even quote my own panel, on collective money management. I'll return to that in a future post.

I'll let Money:Tech conference chair Paul Kedrosky weigh in definitively about the event on his own blog when he catches up on sleep, but from this vantage point it feels like we're still quite early on in the interactions between financial markets and Web 2.0 markets. We'll continue to chronicle them here, in Release 2.0, and at future Money:Tech events. This was a very exciting beginning.

Update: Paul Kedrosky has written about his conference: here's a post-mortem and a personal note.

Money:Tech Day 1: Best Lines [MoneyTech]

There's so much going on at Money:Tech today that I won't try to cheapen it my squeezing it all into a blog post. Indeed, we're planning a full issue of Release 2.0 in April to capture how much has happened in the collision of Wall Street and Web 2.0 since we first identified it last year (PDF link to issue, 2.4M). But, along with our posts on individual talks, I do want to share just a few of the most provocative near-aphorisms we heard today:

James Altucher, Stockpickr, on differentiating between open and proprietary approaches: "Closed source is a myth."

Michael Simonsen, Altos Research, on the organization of information: "Free data on the Internet is a mess"

David Leinweber, UC Berkeley, on how quickly investors have to respond to a news event to take advantage of it in the market: "You have to get the news before the news people get there."

Tom Desmond, TradeKing, on how the Internet democratizes investing: "Turning trading from a solitary function to a social one levels the playing field." This was a notion picked up by Wesabe CEO Jason Knight, who also had the best talk title of the day: "The Death of Quicken." His key line: "People understand the difference between income and debt. They just don't know how debt accumulates." (Disclosure: OATV is an investor in Wesabe.)

Renny Monaghan, Salesforce.com, on the need to balance the need to know everything with the need to get work done: "How do I avoid being a news junkie?"

George Tsiolis, Agoracom, on how the new investor discussion groups are different from the flame-throwing Yahoo groups of yore: "Investors want a community. But they want a civil community."

Mike Gamson, LinkedIn, on who uses his company's service: "our demographics are the same as the Wall Street Journal, except they're slightly younger and slightly wealthier."

Rick Seaney, FareCompare, on what we think of the airline companies we rely on: "Airlines rate lower than the I.R.S. for consumer satisfaction."

It was an exhaustive day. And we get another one tomorrow. I'll be moderating a panel on collective money management -- and there will be 16 other sessions.

LinkedIn Announces New Research Platform

At the Money:Tech conference, Mike Gamson of LinkedIn announced their new line of business to provide primary research services to financial markets, the LinkedIn Research Network.

While the service isn't going live for several months, Mike outlined the core of the value proposition, which I could sum up as a Web 2.0 version of the Gerson-Lehman Group's expert network. Gerson (or GLG as it is often called) has made a splash in investment research by assembling a network of experts on virtually any topic. Subscribers pay a hefty subscription fee for access to that network.

The big difference is that GLG has crafted a stable of hand-picked experts, while LinkedIn will be data mining its database of millions of users to find potential experts. This is significant because hedge funds and other financial firms get little advantage if they are all taking to the same people, even if those people are the top experts in the field. Competitive advantage, referred to in financial markets as alpha, only comes when you have information that others do not. (An earlier speaker, Eric Christiansen of Barclay Global Investors, made clear that people like him think of three types of data: data that everyone has that gives you no advantage, data that you need to know because it gives you no advantage but not knowing can really hurt you, and finally, data that only you have, and can (briefly) take advantage of.)

Because of its Web 2.0-scale pool of connected individuals, LinkedIn hopes to provide insight from unexpected sources. He also pointed out that the social network helps you to evaluate people promoting themselves as experts: Let's say you're considering an investment in a mining concern in China. You see someone who claims to be an expert. Then you see that he's connected on LinkedIn to the CEOs of the top three zinc producers and has in his network 80% of other people you've identified as experts. [This example is not in quotes because it's a paraphrase, but it's as close as I can get it.]

There are already specialized seat licenses of LinkedIn sold to recruiters. Presumably this new service will be sold on a seat basis as well.

Mike makes clear that this initiative is a second run at what they launched last year and called the LinkedIn Experts Network. Obviously, what they did before didn't work. It isn't quite clear how this new effort will be different, but it seems that they will be building more directed social graphs, so to speak, based on the requirements of clients, rather than just building a puppy pile of self-nominated experts and consultants.

It's also not to be confused with LinkedIn Answers, a consumer product that allows you to ask and answer questions from your own LinkedIn network. This would be a professional product, allowing financial professionals to find resources outside of their direct social network. (It isn't clear how LinkedIn will manage users' privacy expectations. I'd guess that they will send out directed opt-in invitations to target experts that they've identified.)

LinkedIn has followed the Web 2.0 path of building a huge data resource before launching ways to monetize that resource. Mike made clear that LinkedIn has hit that Web 2.0 inflection point, reaching 18 million members, but now adding about 1 million/month. (Given that LinkedIn's been around for over six years, that's a huge acceleration.)

There's also some coverage on eweek, based on an interview on Monday.

Jim Cramer, unplugged [MoneyTech]

Those who know Jim Cramer only from the final segment on his nightly CNBC screamfest are missing someone as reasonable as he is entertaining. That more balanced Cramer spoke with Money:Tech conference chair Paul Kedrosky this morning about how technology has changed investing. Kedrosky noted that, compared to 20 years ago, "we're all quants today" because we have so much more information. Cramer characterized it as a move from the anecdotal to the empirical.

Cramer also made compelling cases for the superiority of Bloomberg terminals (an argument that Marketcetera's Graham Miller is countering in a session right now), the eventual demise of sell-side research at the hands of Google, and the indispensibility of the websites Implode-o-Meter and Seeking Alpha. When he moved on to stockpicking, his metier, Cramer said, simply, not to buy tech stocks: "tech has become too dangerous to recommend."

If you can't be at the conference, at least join the prediction markets [MoneyTech]

Money:Tech is about to begin and we'll be reporting from the conference. For those not here who'd like to play along with our conference prediction markets, join in.