It's 1:15 a.m. in early January, and I'm in a hunt for a big trade. Energy is running out of gas; tech is tired; drug makers are comatose. Gotta keep looking -- the market opens in a few hours.
Then an e-mail pops up in my inbox. It's from an economist in Hong Kong. Says Taiwan's exports were down 47% in December from the year before and that half of the decline came from plunging Chinese demand. I didn't know that. Sounds bad enough to make iShares MSCI Taiwan Index (EWT, news, msgs) a good short-selling candidate, since the exchange-traded fund had been up lately. But is that fresh enough news to be tradable?
Only one way to find out now, and that is through the Web's newest 24-hour global information collective: Twitter. When you absolutely, positively have to know something at 1:20 a.m. and don't know whom to ask (or if you do, they're probably asleep), or have a burning ambition to make a quick comment that will be widely and instantly seen, this is the solution. And lately, a lot of traders, investors, analysts, journalists, executives and other early adopters of all things financial and digital are turning to this remarkable resource.
Eavesdropping for dollars
Created by a couple of young Web developers in 2006, originally to provide personal status updates -- in no more than 140 characters -- for a Bay Area delivery business, Twitter has evolved into an amazingly flexible platform for short bursts of real-time conversations by groups of people involved in niche activities.- For more about online investing tools, play the video to the right.
Now considered to be the heart and soul of social networking, otherwise known as Web 2.0, Twitter serves traders focused on swapping buy-and-sell ideas side by side with teens sharing angst, pastors sharing sermon notes, firefighters sharing dispatches, as well as artists, politicians and zookeepers.
Unlike other social-networking sites, such as Facebook, that put up walls among groups, the beauty of Twitter is that you can eavesdrop on any conversation and even contribute when you've got something to say that can be compressed to about 20 words or less. If you want to hear what New York Times or BusinessWeek reporters are saying to their editors and readers, and chime in with your own thoughts, go right ahead by clicking "Follow" on their personal Twitter pages. If you're obnoxious, the folks you follow can block you, but if you mind your manners you can have a front-row seat to some of the globe's most engaging conversations in dozens of languages.
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For some people, Twitter is merely an amusing distraction. But for many investors, it has become as essential as the Internet itself, serving as a worldwide squawk box in which trade ideas are blurted out, analyzed, opened in real time with real money, observed and closed in an endless loop of symbols and passion. Somehow, and no one is quite sure why, the conversation has not yet devolved into the sort of mean, grubby, spam-filled vipers' nests that Web bulletin boards and chat rooms became a decade ago. It's still a place for well-mannered gentlemen and ladies who simply try to learn from each other, collaborate, commiserate and celebrate.
Because the ethic is to help, collective ideas are not shouted out merely to be heard. To gather enough followers so that his or her comments are heard, each Twitterer, as users are called, must find a way to build his or her reputation. A common type of "tweet," or post, is a short link to a news story, blog entry or chart topped with a five- to 15-word explanation.
You gain in reputation if a post is found valuable enough to be "re-tweeted," or passed along by your followers to theirs. That new circle will then have its interest piqued in your ideas. If some folks in that circle decide to follow you, you're off and running in building a "Twitterverse" for exchanging views.
Essentially, tweeting is a combination of micro-blogging (posting quick, time-stamped ideas in a public journal), instant messaging (posting to people receiving in real time), texting (posts must be as short as SMS cell phone messages), high school (posts must be cool if they're going to build your reputation and attract followers) and mass communications (posts can be seen by a single follower, if you're just starting, or thousands, if you're as cool as venture capitalist Fred Wilson.)
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The next bubble to burstWith recent bubbles in the technology and real-estate sectors, it's logical to wonder where the next one will be. The current bubble in the making, Jim Jubak says, is in the Treasury, where inflation is outpacing interest rates.
In every phase of the Internet, one company has come to represent a single big idea and reaped the rewards. Amazon.com is shopping. EBay is auction. Google is search. Facebook is personality sharing. And now Twitter is status updates.
Each has generated big ecosystems of companies focused on extending the concept, from eBay power sellers to third-party Amazon Merchants. It's the same with Twitter, which has germinated dozens of desktop software clients (e.g., TweetDeck), iPhone clients (TwitterFon or Twitterrific), authority graders (Twitter Grader or Twithority) and more tools to enhance and profit from the experience.
Continued: The business of tweets
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