Predictwallstreet.com and what it means for you

Price and volume tell you what investors think a stock is going to do—but sometimes it’s fun to ask people a little more directly.

Predictwallstreet.com asks investors whether any given stock is going to close up or down the next day. The theory makes sense: ask enough people what they think, and you should have enough of an idea what the market will do.

There are some concerns though. Remember that these people haven’t necessarily put their money where the mouth is, something that makes the predictions less human (no greed or fear here). Also, the people who post on sites like these aren’t usually the ones who move markets (professionals and big funds). Both of these should keep you from using this site as an indicator, at least for now.

One trait that I find useful is the rating system that keeps tracks of registered users hit/miss ratio as well as the communities overall success at predicting individual stocks movements. This gives the predictions with a consistent success rate a little more credence.

It may be worthwhile to study the times when the majority opinion differs from the people who have a higher success rate (you can read individual predictions on the comments under each stock). If you find some consistent winners disagreeing with the consensus there may be something worth closer study going on.

Whether predictwallstreet.com is useful or not remains to be seen. What I can tell you now is that it’s entertaining and it can give you some insight into the market’s state of mind. Remember, the key to the investment game is getting enough clues to turn the odds in your favor.

Technocrati Tags: Money, Investing, Stocks, Market Prediction