Opion as a Company Dealing with Buzzes Scores of the Stock Indices - Case Study Example

Opion is an organization that forecasts emerging trends and patterns by identifying punters involved in public group discussions and drawing a parallel to actual events. This is especially helpful to see what pattern a change follows driven by public discussions. The company's work is done primarily in stock trading analysis and movies at the box office. It is a well-known fact that stock exchanges all over the world are slaves to conjecture and speculation. The case Opion here talks about Opion as a company dealing with buzzes scores of the stock indices. This case deals with how the company deals effectively with providing a service that is accurate and more than what the competition is offering. It is not very easy to give a verdict about a particular stock following its speculation in the market and people's perception but this is exactly what Opion set out to do in 2001 despite competition from the likes of a Vancouver based MindfulEye (www.mindfuleye.com) which provided a Moodscore for several stocks and Stockscores (www.stockscores.com) which provided clients with actual stock analysis based on technical grounds. Stockscores was actually superfluous because it did not provide analysis based on verbal speculation but Mindfuleye was more of a competition although none of these were considered actual competitors of Opion. Opion was a different ball game altogether. Its major product was Opion Financial Pro 1.0 which calculated hourly buzz scores on three major indices namely the Standard and Poor's 500, the NASDAQ 100 and the Dow Jones 30 Industrial Average. The basic work of Financial Pro 1.0 was to gauge fluctuations in stock values and help portfolio managers become better decision makers by analyzing how investors perceive a particular stock. Later, traditional methods were used to analyze the stock on more technical grounds. One of the major disadvantages of using such a method is inaccuracy. While general mummer about any particular stock may show the level of interest and assumption in the stock, rumors can kill an investor's homing skills. For instance, ten people on a message board may have positive views about how a stock is going to perform but one intended negative remark can make its price go down and wane investors' interests despite the stock being of par value. Hence Opion took three measures that advised a conjecture about a stock to be negative or positive. Relevance was of the utmost importance as trying to determine whether a particular posting is pertinent to the topic being discussed is of very high significance. Credibility came next as anyone can register on a forum and start discussions about something they may or may not know much about. So determining people who were actually familiar with the stock market lingo and characteristics was a challenge but a necessary one at that. Lastly, came influence. Any messaging or posts in a discussion forum are subject to influence from other people or even generally what is written in the forums. Influence gives wind to rumors and rumors blight credibility dramatically. These were some challenges that Opion had to face, which other companies may not have taken into consideration. Buzz scores, however may not be too accurate when looked at from a certain point of view. The case explains that there was high variance from day to day and stock to stock. While day-to-day variance may be taken into account and dealt with considering fluctuation volumes, stock-to-stock variance gave heed to inaccuracies. New economy stocks like Microsoft and Cisco obviously generate more talk and interest than old economy stocks due to the perception that these are essentially more profitable. Actually, this may not necessarily be the case. The major reason a new economy stock will be seen more optimistically is the fact that more people are talking about it and there is more speculation as to the trading of this stock. Old economy stocks may not be favorites here despite their market moving and index weight abilities. Hence, Opion was prone to get somewhat irrelevant results since the Opion Engine was developed to gauge only what was "most talked about". The challenge was obvious. What needs to be done now to ensure that at least all blue chip companies' stocks are given somewhat importance in order to measure the actual buzz precisely If we see the number of message board postings, stock prices, daily volumes and average daily buzz of Microsoft, Phillip Morris, Exxon and Cisco; we will see that Microsoft alone has bagged the highest buzz volume. Now this may or may not be due to the company's excellent reputation and stock share in the prevalent indices but die to the mere fact that Microsoft is a giant and a favorite because people are blindfolded when they invest in a company of such massive index strength. There are certain other companies that may be able to provide investors with the same amount of profit but these are overshadowed by what is being "talked about". It would have been a good initiative to develop a system where Opion Engine users were made to develop interest in companies other than the new economy ones. One way to ensure this was to quote old economy stocks like Caterpillar and International Paper on a daily basis so that these stocks are prominent in the eyes of the investors. Creating awareness through the Opion Engine is the key to get things rolling in this arena. It is true that by deliberately bringing a stock in the forefront may be figured as giving it uncalled for publicity without actually getting paid for it but then this is something that needs to be taken into account. If punters at the discussion forum do not know of the existence of a particular stock or have forgotten it in the shadow of a new and more interesting stock, they cannot be held responsible for not creating a buzz about it. The creators of Opion Engine may have their work cut out for them as this will require another live module to be designed that will inform people of the current hot favorites in all genre and not be restricted to just one. However, by doing this, accurate buzz will be created and investors will flock to use this engine. NUMBER OF MESSAGE BOARD POSTINGS, STOCK PRICES, DAILY VOLUMES AND AVERAGE DAILY BUZZ FOR MICROSOFT, PHILLIP MORRIS, EXXON AND CISCO Company Date Number of Price Volume Buzz Messages1 Microsoft Fri. Oct 19 130 57.90 45,615,900 206.1 Thurs. Oct 18 106 56.75 39,195,600 221.7 Wed. Oct 17 108 56.03 36,865,200 450.5 Tues. Oct 16 90 58.45 33,110,900 286.8 Mon. Oct 15 96 58.06 34,229,200 247.5 Fri. Oct 12 47 56.38 31,685,000 275.2 Thurs. Oct 11 96 56.32 41,891,800 499.6 Wed. Oct 10 181 55.51 43,185,000 686.1 Tues. Oct 9 98 54.56 49,742,500 454.1 Mon. Oct 8 62 58.04 30,305,800 164.9 Phillip Morris Fri. Oct 19 2 49.91 4,602,400 10.5 Thurs. Oct 18 7 49.30 5,638,200 29.8 Wed. Oct 17 0 50.01 6,133,600 6.8 Tues. Oct 16 2 50.69 4,267,800 4.8 Mon. Oct 15 11 50.48 3,631,700 44.8 Fri. Oct 12 11 50.64 10,050,200 20.8 Thurs. Oct 11 3 51.02 7,482,100 16.6 Wed. Oct 10 11 51.31 7,611,400 41.0 Tues. Oct 9 25 50.97 7,800,500 35.1 Mon. Oct 8 10 50.64 4,494,700 31.9 Exxon Fri. Oct 19 0 40.54 11,638,600 4.4 Thurs. Oct 18 1 40.40 9,572,700 6.0 Wed. Oct 17 3 41.44 8,573,900 12.3 Tues. Oct 16 0 41.75 6,859,800 5.7 Mon. Oct 15 4 41.65 6,662,000 12.5 Fri. Oct 12 0 42.29 11,409,600 3.3 Thurs. Oct 11 2 42.09 10,756,400 9.7 Wed. Oct 10 2 42.28 10,453,600 10.0 Tues. Oct 9 3 41.06 7,209,500 12.7 Mon. Oct 8 3 40.94 8,799,500 9.5 Cisco Fri. Oct 19 14 16.72 69,947,500 58.1 Thurs. Oct 18 13 16.72 72,685,700 33.0 Wed. Oct 17 21 15.60 87,344,600 81.5 Tues. Oct 16 9 16.97 69,242,700 39.2 Mon. Oct 15 13 16.21 63,245,200 44.3 Fri. Oct 12 23 16.95 125,292,200 63.8 Thurs. Oct 11 34 16.46 113,145,700 50.8 Wed. Oct 10 14 15.15 64,764,600 42.3 Tues. Oct 9 23 14.59 62,928,100 62.6 Mon. Oct 8 17 15.05 70,666,200 48.5 We have to perform numeric calculations in the data in order to understand the data like mean and standard deviation. As, buzz is the average value so it can be taken as mean value i.e. x'. The data along with calculations is given below: Company Date Number of Price Volume Buzz Mean x' Messages1 Microsoft Fri. Oct 19 130 57.9 45,615,900 206.1 Thurs. Oct 18 106 56.75 39,195,600 221.7 Wed. Oct 17 108 56.03 36,865,200 450.5 Tues. Oct 16 90 58.45 33,110,900 286.8 Mon. Oct 15 96 58.06 34,229,200 247.5 Fri. Oct 12 47 56.38 31,685,000 275.2 Thurs. Oct 11 96 56.32 41,891,800 499.6 Wed. Oct 10 181 55.51 43,185,000 686.1 Tues. Oct 9 98 54.56 49,742,500 454.1 Mon. Oct 8 62 58.04 30,305,800 164.9 Total 1014 568 385,826,900 3492.5 Standard deviation 165.93186 Company Date Number of Price Volume Buzz Mean x' Messages1 Phillip Morris Fri. Oct 19 2 49.91 4,602,400 10.5 Thurs. Oct 18 7 49.3 5,638,200 29.8 Wed. Oct 17 0 50.01 6,133,600 6.8 Tues. Oct 16 2 50.69 4,267,800 4.8 Mon. Oct 15 11 50.48 3,631,700 44.8 Fri. Oct 12 11 50.64 10,050,200 20.8 Thurs. Oct 11 3 51.02 7,482,100 16.6 Wed. Oct 10 11 51.31 7,611,400 41 Tues. Oct 9 25 50.97 7,800,500 35.1 Mon. Oct 8 10 50.64 4,494,700 31.9 Total 82 504.97 61,712,600 242.1 standard deviation 14.3456885 Company Date Number of Price Volume Buzz Mean x' Messages1 Cisco Fri. Oct 19 14 16.72 69,947,500 58.1 Thurs. Oct 18 13 16.72 72,685,700 33 Wed. Oct 17 21 15.6 87,344,600 81.5 Tues. Oct 16 9 16.97 69,242,700 39.2 Mon. Oct 15 13 16.21 63,245,200 44.3 Fri. Oct 12 23 16.95 125,292,200 63.8 Thurs. Oct 11 34 16.46 113,145,700 50.8 Wed. Oct 10 14 15.15 64,764,600 42.3 Tues. Oct 9 23 14.59 62,928,100 62.6 Mon. Oct 8 17 15.05 70,666,200 48.5 Total 181 160.42 799,262,500 524.1 standard deviation 14.334453 Read More