StockTwits: A Time Waster Or Can It Be Useful?

StockTwits is an incredibly addictive platform for anyone who likes social media and the stock market. For a lack of a better description, it is Twitter for stocks.

When I first signed up I did so out of curiosity and expected to spend an hour or two at most before I got bored and abandoned it forever. I don't have a Facebook page and have little interest in social media so I figured my time on StockTwits would be short.

Well, I'm finding I use it every weekday the market is open and I want to explain what I use it for.

First of all, you can waste a tremendous amount of time on StockTwits and most people do. Just like Twitter, it is a place where anyone can post anything and it has a character limit of 140. You can link to pictures, articles, blogs or just about anything you want to as long as you stay within that 140 character limit.

Most people only post meaningless chatter about the stocks they own or follow. So, if you go there just to read the "Twits" and shoot the shit, you can waste as much time as you like and maybe have some fun if that is your sort of thing.

But I use it to find out what stocks have the most action and have breaking news and I find that on the top part of the StockTwits screen where they have the trending stocks. The stocks that are "trending" have the most chatter and there is usually a reason for that so I can just quickly look at the home screen to see what stocks are hot at the moment.

You can see in the screenshot above that Amazon is listed first and the stock is getting hit hard after a bad earnings report. Fourth on the list is Baidu which is trending for the opposite reason: they just released a good earnings report and the stock is up nicely.

Overall, I believe StockTwits is a colossal waste of time and I try to spend as little time on it as possible. It is a meeting place for like minded stock market junkies who mostly post meaningless opinions. 

However, I do use it to as a quick way to see what stocks have breaking news and/or are being talked about the most and I don't know anywhere else you can get that kind of instant information on the Net.

USING CHARTS TO BUY STOCKS - ITS HARD!

Gary B. Smith is on Fox Business News as a frequent guest analyst and he also is a regular commentator on a show called "Bulls & Bears". His nickname is "The Chartman" because his expertise is picking stocks by just looking at their charts. Thats it....he doesn't care what a company does or anything else about it....he only cares about its chart.

Since I have never picked a stock solely on the basis of what the chart looks like, I can't personally vouch for whether a person can really make money over the long term that way. But one thing I do know, if you invest only on the basis of a stock's chart, you will be doing a lot of short term trading and you better keep abreast of what is happening on a daily basis because one break in the chart's pattern means you need to sell or buy.

Can buying and selling stocks purely based on their charts really be called investing?  I guess it can because the definition of the word mentions only that you put money to use with the expectation of making a profit. But if charts are the only way you pick stocks, it sure seems like you need to devote a tremendous amount of time to the endeavor because it isn't easy. Charts have an endless number of patterns and interpretations and mastering a winning strategy seems to be out of reach for most investors.

Interestingly, in Gary's latest article, he talks about investing for his daughter's future. I don't know what their ages are and he doesn't say but based on his age, they are perhaps between 10 and 18 years old. Does he talk about teaching them the charting process and daily grind of chart analysis? Nope. Seems like he prefers the old long term buy and hold a solid stock method for his daughters who have many years ahead of them before retirement.

He picks two stocks (ExxonMobile and Waste Management) because they presumably will stand the test of time and be around for the next 50 years. Putting stocks you know are solid picks in your portfolio seems to be what he would suggest for own daughters. That has to make you wonder about the validity and difficulty of his preferred investing style of chart analysis.

Again, I know some people are able to make money in the stock market just by analyzing charts. However, for the vast majority of investors, that seems like something that is just not feasible because of the complexity and the high number of hours it would require to learn. For most people, it is best just to pick good companies, buy their stocks, and watch them grow over the long term.