« For transparency...in government and p2p micro-lending at Kiva | Main | An Interview with Lending Club: The future of P2P lending and what can be learned from microfinance »

Collective intelligence at the Motley Fool to evaluate stocks

The Motley Fool, a financial services company and online investment community has a new service, CAPS, to find and evaluate the next big stocks. The site automatically screens for promising small-cap stocks and then publishes them on the site:

We'll tap the collective intelligence of our CAPS members to see whether these companies present real opportunities -- or whether the numbers fail to tell the true story.

CAPS members can then give the stock a 1 to 5 star rating based on their personal evaluations, presumably with the goal of sinking obvious-yet-less-promising companies and raising hidden gems. Here is the interface:

This service seems a bit superfluous. Since these are all publicly traded companies, I would think that the stock market is already pricing them to reflect their future value [and since real money is on the line, I would expect the real market to be more accurate and reliable than a 5 tier starring system]. But I will take the Hansonian* point of view that traders in this marketplace enjoy affiliating with the Motley Fool and trust that segment of the population to be wiser than the broader investing population.

*A philosophy, espoused by our friend Robin Hanson, that explains much of human behavior in terms of signaling and affiliation. See here.

PrintView Printer Friendly Version

EmailEmail Article to Friend

References (3736)

References allow you to track sources for this article, as well as articles that were written in response to this article.