Stellar Startups: Your two cents – and the Internet’s

Today everyone has an opportunity to spread their opinions as far and wide as possible. Blame it on the Internet.

By DAVID SHAMAH
May 11, 2010 11:24
Gadi Shvadron

Gadi Shvadron 311. (photo credit: Courtesy)

Everyone’s got an opinion – sometimes two or three. And today, fortunately or otherwise, everyone has an opportunity to spread it as far and wide as possible. Blame it on the Internet.

For those who like a divergence of opinion, the Internet is heaven. But for the easily swayed – or those lacking decision-making skills – life has gotten harder. There’s more noise than ever, and making sense out of all the ideas and opinions is almost a full-time job. It’s bad enough when you’re trying to figure out, say, the news. But if you’ve got money riding on figuring out those opinions, it’s enough to drive you crazy.

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Here are some facts and figures, courtesy of Gadi Shvadron, cofounder of Bulloonz (http://www.bulloonz.com/): Each year, 20 million Americans trade stocks online, and 10 million actively post “authoritative” information on trading, in the form of news and opinion articles, blog posts or “open comments” (many of which are often barely disguised ads pushing potential customers to purchase often-dubious “products”). In all, there may be as many as 70 million opinions for traders to choose from – traders who have real money riding on that advice.

“Our slogan at Bulloonz is creating order out of chaos, and that’s exactly what our technology does for people who follow stocks online,” says Shvadron. “Today, there are great tools for users who want to trade online, but there is no way for them to get reliable advice on what to invest in – especially if they’re casual traders and not day traders who are totally immersed in the markets. With Bulloonz technology, they’ll be able to get a broad picture of the sentiment surrounding the market as a whole, as well as of specific stocks.”

As everyone knows in this post-bubble world, investing is often more about “sentiment” – the opinions, ideas, feelings, emotions and other not-necessarily logic-based features of the human psyche – than it is about the “fundamentals.” Whose opinion do you rely upon when you “play the market?” Is it the person who posts longest and loudest at the forums on Yahoo Finance? The talking heads on Bloomberg or CNN/FN? The bulls? The bears? The contrarians? The gold bugs?

Obviously, the answer is – must be – none of the above, at least exclusively. But then what is the answer? Until now, there hasn’t been one: you picked an opinion (or formed one on your own, using your limited resources), you took your chances and you paid your money. But with the technology developed by the Bulloonz team – which includes computer, finance and text-analytics experts – consumers no longer need to choose investment opinions by throwing darts (as good a system as any, in the pre-Bulloonz world).

Instead of presenting you with a single stream of opinion, a Web site equipped with Bulloonz will parse through the gamut of Web opinion (from the experts and the hoi polloi) and present you with easy to understand and handle results. Depending on the site and the way the technology is used, Bulloonz could, for example, present users with a “sentiment rating” – a number that would “grade” the positive or negative sentiment on a stock, based on what the rest of the world thinks of it.

The technology could also be used to differentiate between sentiments: listing the chief positive, negative or indifferent opinions, allowing users to follow the leading lights professing that sentiment and enabling them to discover opinion makers they may not have been aware of. Or it can help them get expert or average investor thoughts on how specific news stories will affect industries or individual stocks.

Shvadron stresses that Bulloonz doesn’t presume to be a predictive tool, but is rather an informational one. “Consumers are in the final analysis responsible for what they do with their money,” he says. “Our role is to make sure they have an opportunity to get the information they need to make educated decisions. Sentiment and psychology are such an important part of investing, but until Bulloonz there has been no rational way to get a handle on it. We allow users to sort through the noise and discover the information they need to help them make better investment decisions.”

Thanks to the development of powerful algorithms, large databases and superior search and sort tools, it is now possible to parse through huge amounts of opinion and translate it into quantifiable or otherwise manipulable sentiment, turning it into a tool for investors to deploy when deciding how, where and even if to invest, Shvadron says.

This isn’t exactly the “wisdom of crowds,” but a different approach to handling mass amounts of data, he says. “We don’t restrict our search and analysis algorithms to experts or specific types of opinions. We’re interested in what everyone has to say about a stock or the market in general, because if enough people are saying it, they are influencing the psychology of the market and creating sentiment.”

It makes sense, because if investor sentiment on a stock is too negative – even if that sentiment is based on inaccuracies – that negativity cannot help but affect the bottom line: the price of the stock.

It also works the other way around, Shvadron says: “In recent days, for example, we’ve seen a lot of negative opinion about stocks in general, but we see many specific stocks continuing to do well – and the ‘buzz’ about those stocks is generally positive.”

Without Bulloonz to help investors out, that positive sentiment would probably have gotten lost in reams of opinion out there, accessibly only to the most dedicated online investors – if, indeed, even they could have “heard through the noise,” he says. With Bulloonz, accessing that positive sentiment – now turned into another tool for investors to use before deciding where to park their money – is as easy as clicking on a few buttons.

Shvadron and his partner, Omri Braun, set up Bulloonz about a year and a half ago, and the company – which has 16 employees, soon to increase to 25, says Shvadron – is set to deploy its technology on several financial Web sites in the coming months, after bringing in Orey Gilliam, formerly head of AOL Messaging and CEO of ICQ, as Bulloonz CEO.

And don’t worry about that name. Shvadron says it’s set to change in the coming months. The name Bulloonz has nothing to do with the circus or birthday parties, he says: “When we first started the company, we wanted something that would evoke stock-market bullishness.” But considering how online investors, who for years have been stabbing in the dark when it came to understanding sentiment, will benefit from the technology, any name would probably be just fine!

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