Drama 20 Show | Drama 2.0 Spiked the Web 2.0 Kool Aid

This was the Drama 20 Show which offered advice and dispensing nuggets of knowledge.
Drama 2.0 spiked the Web 2.0 kool aid by providing a critical analysis of Web 2.0 startups and the impact of Web 2.0 on the media industry. Other topics that were explored when Drama 2.0 has a slight buzz.
The content is from the site's 2007 - 2008 archived pages.

POSTS

 

The Stupidity of Social Investing Websites

Posted on September 5, 2008
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Ive always been somewhat amused by social investing websites like Cake Financial and Covestor. As someone who trades stocks and options for more than just fun, I have always believed the utility of services that look to help amateur investors by sharing the portfolios of their members and tracking results is minimal.

While a detailed discussion of my beliefs is beyond the scope of this blog and would be boringly technical, I found a good way to address the subject by using the announcement of Cake Financials new index fund - the Cakedex.

The Cakedex is an index of the top 100 holdings of the top performers on Cake. In the near future, the Cakedex will be turned into a real index fund that investors can purchase.

Cake Financial touts that over the past five and half years, the Cakedex would have outperformed the SP 500, the Dow Jones and the NASDAQ.

Fair enough - if youre willing to ignore the fact that the bull market which ended this year started in 2003, making it possible for even monkeys to make money over the past five years (and many of them did).

But beyond this, theres an important fundamental question - why would any amateur investor want to put money into a hodgepodge index fund whose holdings are based solely on the portfolios of a small number of unknown individuals who have supposedly done well by Cake Financials measure?

What knowledge and experience do they have? How have they performed in different kinds of markets? What rules and investment strategies do they adhere to?

Without answers to these questions, putting money in a Cakedex index fund is going to be a lot like giving money to a class of third graders and asking them to buy stocks with it.

To demonstrate this, I decided to look at some of the components of the Cakedex today.

Google (GOOG) makes up 2.63% of the Cakedex index this month. But its in a clear downtrend. The chart below is not one that an experienced trader trades long yet GOOG been in the Cakedex since May.

 

Washington Mutual (WM) has come off of its July lows but the chart is pretty clear - this is not a time to be long unless youre trying to call a bottom (which you dont do).

 

Why has Yahoo (YHOO) been in the Cakedex since May? With all of the Microsoft drama, YHOO wasnt a stock for amateurs to play given the fact that it was a highly visible target for large institutions that like to fool around. And for those who traded YHOO in may, the chart made it clear by June that this wasnt a stock worth holding long.

 

Potash (POT) is a stock I know extremely well from my own trading. It has been the beneficiary of commodities boom and the impressive uptrend seen on a one year daily chart shows this quite spectacularly. Although its underlying fundamentals are solid in my opinion, POT broke through the neckline of a head and shoulders formation recently, signaling a reversal. And as much as I like the company, a good company doesnt always make a good investment and this turned into a short trade real quick, not a long one.

 

These are but a few examples I found of stocks in the Cakedex that break very simple and very basic trading rules. From oil companies to gold to financials, there is no shortage of Cakedex holdings that are fighting todays market forces - and it took less than 15 minutes (and some very sloppy trendlines) to spot them.

Of course, its fair to point out that not everyone believes in technical analysis. But you can be sure that the traders at major institutions who are in business to take your money are paying attention to technicals and what Ive done above isnt anything more complicated than looking at a chart and drawing a line with a ruler. There are no special indicators other than price and price never lies.

Its also fair to point out that people will say, But Drama, buy and hold is a good strategy over the long-term. These stocks will come back at some point.

Yes, everyone wants to believe that theyre a Warren Buffet even when its a bit more complicated than that.

In my opinion, buy and hold often equates to a hope and a prayer - especially in a market like this. I dont advocate that the average investor trade day in and day out, but by looking at a one year daily price chart, drawing trendlines and recognizing common chart patterns, individuals can not only keep themselves out of bad new trades, they can exit existing ones before they turn bad.

Fewer bad new trades leads to lower losses and timely exits lead to maximized profits. Whats wrong with that? Nothing, unless you like sitting on losses and letting gains evaporate.

Unfortunately, I see no evidence that the best of the best on Cake Financial as reflected by the Cakedex index are anything more than amateur investors who dont know what theyre really doing.

And the recent performance of the Cakedex seems to confirm that. The index lost nearly 10% in June, 8% in July, .15% in August and is down over 6% this month thus far.

For those keeping score, thats almost 25% in less than 4 months. Painful.

At the end of the day, the Cakedex is an interesting novelty but not much more than that. If youre looking for the wisdom of the crowd in the stock market, look at a price chart, not a social index fund.

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When Politics Invades the Tech Blogosphere

Posted on September 4, 2008

With elections in the United States just two months away, its not surprising that political talk (and blabber) has invaded the technology blogosphere.

TechCrunch got involved early - it launched the TechCrunch Tech President Primaries because it wanted to provide a voice for digital policy and technology issues in the upcoming U.S. Presidential election. Fine, but recently, TechCrunch editor Erick Schonfeld took some heat for a political post that was read by some as being in bad taste.

Mark Rizzn Hopkins at Mashable is also known to interject his political opinions into his writing. His recent post about Sarah Palin looked a bit out of place on Mashable.

And Dave Winer, the father of blogging and RSS, yesterday published his own Palin piece.

These are but a few examples of the fact that in an election year, the technology blogosphere has merged with the political blogosphere.

Of course, this isnt entirely surprising. Politics is a subject people are passionate about. It brings out emotions and fuels tensions. People want to debate and discuss it. As Aristotle said, Man is by nature a political animal.

And given that technology is (supposedly) playing a major, substantive role in the American political scene this year, there is room for some discussion about the intersection of technology and politics.

I, for instance, have discussed politics on The Drama 2.0 Show in the context of how politicians are now using the Internet and social media as another medium through which their bullshit can be broadcast and how misguided efforts to change politics through technology arent going to work. Ive also discussed economic issues, which are inseparable from politics.

But in my opinion, many in the technology blogosphere have crossed the line by getting too detailed when it comes to specific political views and specific candidates. Once a bloggers political affiliation and candidate of choice becomes clear - especially during an election season - things have probably gone too far.

Lets face it: when it comes to politics, opinions are truly like assholes - everybody has one. And just as most people dont want to look at pictures of assholes all day, most people, especially those reading technology blogs, probably dont want to read political opinions from their favorite technology bloggers.

Obviously, its unrealistic to expect that bloggers will be able to completely neuter the urge to express their political views. But for blogs that are published to generate profit (or for individuals with industry reputations to maintain), I believe that those who get too political are foolish.

Why? The passion and emotion it evokes can quickly lead to conflict.

Technology bloggers (and popular industry personalities) really have nothing to gain from broadcasting their political views and they have a lot to lose. Its not difficult to alienate readers and turn people off.

Frankly, I could care less what Michael Arrington, Erick Schonfeld, Mark Rizzn Hopkins and Dave Winer think about American politics and presidential candidates.

And most of their readers probably care less too.

Fortunately, at least one other technology blogger recognizes the wisdom of not discussing politics.

Steve Hodson of WinExtra recently observed:

If there are two things that can ruin friendships faster than anything else in this world it is when the discussion turns to politics or religion. Either subject has the ability to turn a roomful of otherwise intelligent people into stark raving lunatics in short order.

And most importantly:

The problem is that [when politics is discussed it is] incredibly hard to filter out and in the process ruin[s] my experience of enjoying my daily news intake. Another problem is that it can also create an impression of the service of having a particular political (or religious or sexual) bias that can in effect harm the reputation of that particular service.

In conclusion, heres some advice for technology bloggers who cant control the urge to inject their political beliefs into their posts: politics itself may be big business but discussing politics is usually bad business.

Sponsor Shout-Out

Posted on September 1, 2008
Filed Under Commercial Interruptions |

With gas prices hovering at the US dollar equivalent of around $4.70 where I live, filling up a car that gets around 41 liters per gallon city (approximately 11 miles per gallon) is not fun. But thanks to the sponsors of The Drama 2.0 Show, Ive got a little fuel subsidy.

My lead sponsor, Finnish startup MySites, which is designed to serve as a single place for all your online needs, has been busy implementing user feedback and working on some launches that it considers very important to its future, including the launch of a new design and its open development framework and developer platform. It has also been busy sponsoring events in Finland as part of its efforts to introduce MySites to prospective users.

E-consultancy.com, my home away from home, is the UK’s leading online publisher of best practice internet marketing reports, research and how-to guides. If youre going to be in London on September 4, be sure to RSVP ASAP for the free Lemon Summer Party hosted by E-consultancy.com and Lemon Studios. Over 700 digital marketers and e-commerce professionals have already reserved their spots!

 

2007

 

Sorry Robert, Size Does Matter

Robert Scoble has posted his commentary following the news that Perez Hilton, one of the worlds most popular online personalities, made a paltry $5,000 in revenue from his revenue sharing with YouTube despite the fact that his videos have received 25 million views over the past three months.

In his commentary, Robert proclaims that asking What’s your audience size? is the wrong question. Why?

In the past few years I’ve had some success building audiences, but I found that that’s not really what’s important. It’s not what advertisers REALLY care about.

 

Zivity: Geeks Gone Wild

TechCrunch has revealed that Zivity co-founder Cyan Banister, who apparently won some Sexiest Geek Alive award that nobody has heard of, plans to post topless photos of herself on Zivity next week and may go completely nude in the future to promote her startup. Wow. Im sure the male species is holding its collective breath. Or not.

For those who are unfamiliar with Zivity, heres how the company describes itself:

Zivity offers a reality media platform for sexy models and beautiful photography where members get to distribute royalties to the models and photos they find appealing via Zivitys patent-pending dollar-backed voting system. With a $10 subscription, members receive five votes every month to cast for their favorite Zivity stars.

 
 

Dramas Roundup - December 30, 2008

Internet opens elite colleges to all 
Why Its Interesting: Elite universities such at MIT are increasingly making their courses available for free online. While viewers who arent students obviously dont earn degrees, the availability of the same knowledge and course materials that are provided to paying students, many of whom go into substantial debt, is a good thing for individuals who take advantage of it. Id argue that degrees are of value primarily because of alumni networks and that knowledge and skill can take a hungry individual even further than a degree can. Of course, Im biased - Drama 2.0 did not attend university. Ive simply befriended people who went to the best so I can tap into their alumni networks.

 
 

Dating 2.0 Debunked

The modern dating scene has been impacted greatly by online dating services like Match.com and online social networks like MySpace. Back in 2003 I almost got involved with an online dating venture and thus Ive given some thought to the online dating phenomenon a number of times over the years. After reading a Reuters article yesterday about an anthropology professors study of Canadian women over the age of 30 who are using online dating services, I decided that it would be worthwhile to analyze what has become a part of mainstream culture that affects the way many people are interacting and building relationships.

 
 

Surprise: Rich Guys from Google Want to Become Investors

The New York Times has published an article that discusses the increasing number of Google employees who are leaving Google and deciding to become investors. Some are becoming angels, some are joining VC firms and others are raising their own funds.

TechCrunch has proclaimed Here Comes The Google Mafia in reference to the PayPal Mafia that has carved out a niche in Silicon Valley (I hear they control all of the racketeering east of Sand Hill Road). While the legion of Google investors have not yet organized in the same way that the PayPal Mafia has, that could be changing. Former Googler Aydin Senkut, who left Google in 2005 and has been an angel ever since, stated We are planning to bring all the ex-Googlers who are starting companies and investing in companies together to tighten up the network.

 
 

Taking an Online Life to Regain a Real Life

The Times Online has an interesting article entitled Facebook suicide: the end of a virtual life. In a semi-humorous way, it provides a modicum of hope that there still exist people in this world who recognize just how pathetic social networks can be.

The article is interesting if for no other reason than the fact that it touches on quite a few of the subjects Ive discussed in previous blog posts. Among the most salient points:

 

Mahalo Needs to Say A Hui Hou

Human-powered search engine Mahalo, which I named as one of the Dumbest Startups of 2007, really needs to say a hui hou (goodbye). Through Center Networks, I was led to a blog post by Mahalo CEO Jason Calacanis that I believe shows just how hopeless this startup is.

Any doubts? Just consider the following excerpts from Calacanis erudite post:

My thinking is that if you are super upfront about whats an advertisement and whats content folks will really focus on the ads *IF* they are in commerce mode. If users are not in commerce mode we dont want to try and trick them/shif them. let them stay in information mode.

 

Dramas Roundup - December 28, 2007

Researcher: Info Overload Costs Economy
Why Its Interesting: Research firm Basex Inc. estimates that disruptions caused by information overload cost the United States $650 billion every year. Thats right, even those useless employees who arent wasting time outright are apparently costing American employers hundreds of billions of dollars a year because of technology.

Eighty Things to Watch in 2008
Why Its Interesting: While I usually pay no attention to predictions except my own (including my personal non-predictions that get stolen by BusinessWeek), ad agency JTWs Eighty Things to Watch in 2008 piqued my interest if for nothing more than its randomness (assisted marriage is the #3 thing to watch in 2008?). I guess next year Im going to have to up the ante by listing 2009 things to watch in 2009.

 
 

BusinessWeek Sucks

BusinessWeek lost a lot of credibility when it put Kevin Rose on its cover with the headline How this Kid Made $60 Million in 18 Months. What little credibility BusinessWeek had left went out the window yesterday when BusinessWeeks Los Angeles bureau manager Ronald Grover wrote an article entitled Ten Things That Wont Happen in 2008 with a subtitle of Pundits are eager to provide their predictions for the new year. Heres something a little different. Grover states:

Im gonna go in a slightly different direction for no reason other than, well, this is my column. And I can.

 

Dramas Roundup - December 24, 2007

Its Christmas Eve and despite having just had eight nights of Hanukkah, Im feeling a little left out of all the holiday fun. So I thought Id post something on my blog to ease the pain of knowing that a fat guy who I could plausibly mistake for a burglar isnt going to enter my home tonight and provide me with an opportunity to use my 12 gauge.

 

 

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