Show HN: Cappio – stock research that isn't overwhelming | Hacker News Reader

Show HN: Cappio – stock research that isn't overwhelming

capp.io

88 pointstimtamboy6370 comments

Near as I can tell, this site is basically Google finance with a bunch of nicely color coded indicators of various components of the stock. It looks pretty, prettier than google finance. At a glance, I can easily tell whether you think I should buy or sell that stock.

This is nothing but stock market info porn. All you are doing is using web design to convince me to take seriously your opinions on whether GS or TWTR is going up or down. It's the web 2.0 version of an analyst in a nice suit. It looks cool, but no reason to believe there is real substance.

The fact of the matter is that if I'm actually going to be speculating on individual stocks (which I do, but mostly as a quant), I need a lot more info than this.

I don't want to be entirely negative, so I'm going to suggest a tool which I think might actually be handy, and could use with some nice presentation. Ask the user a little about themselves, and then suggest stocks/ETFs they can put money in to hedge their risks. E.g., if a person works in tech, suggest to them a portfolio that is disproportionately less tech heavy - that way, if their industry tanks, their retirement won't necessarily do the same. If a person expects lots of medical care later in life, suggest them a portfolio heavy on medical stocks so that if their expenses go up, their investment does too.

Thanks for the feedback.

We're trying to serve the less educated investor so we take basic fundamental analysis and automate it while making the insights more accessible to someone who is less financially literate.

It's interesting that you bring up personalization too because we're headed in that direction with customizing reports and creating recommendations based on factors like risk profile, age, and retirement plans.

We'd love to chat if you have time. You can shoot me an email at jay@capp.io

I think you're doing a good job, but keep in mind that good UX for an investor are metrics which helps me him make more profit. For instance if I come up with a metric which helps me make a better decision that is a good UX for me. But at the same time, a better way to interact and look at existing metrics also helps me better utilize them.

To put it simply, whether some guy thinks you have a product or not, you definitely do. Its not just stock market info porn, or a fancy web design over google finance, rather its as important as a new 'indicator', i.e. it does(could) have the right substance.

I thought that yummyfajitas' point was that fundamental analysis doesn't work, like all public forms of stock market analysis. Financially illiterate people are even less likely to understand that, which means that making the "insights" accessible is actually worse for the user than having them not be accessible.

Roughly what I was saying. I don't actually think all forms of analysis don't work, and I currently run a strategy I do think works. Note the strategy involves no web design or pretty colored boxes. I run it like this:

    $ python compute_trades.py

Then I manually enter the results into my broker.

However, you are correct that I believe accurately communicating dubious information is nothing more than duping credible idiots with pretty web design.

Out of curiosity, where does your script get data (prices and whatever else)?

Quandl for now, but fairly soon I'll be collecting realtime prices from interactive brokers.

(My strategies generally run on a daily basis, so daily data is good enough for that. But soon I'm going to switch to a full algo strategy, which will require realtime data to backtest.)

Thanks for your response! Good luck.

> The fact of the matter is that if I'm actually going to be speculating on individual stocks (which I do, but mostly as a quant), I need a lot more info than this.

I disagree, I think this tool could have value in the stock screening process, where you look at 100s of stocks quickly to winnow it down to a few promising candidates. After that step, I agree with you a more traditional stock analysis data interface is better.

> If a person expects lots of medical care later in life, suggest them a portfolio heavy on medical stocks so that if their expenses go up, their investment does too. How is what an individual spends in medical care correlated with medical stocks?

I agree, this doesn't make much sense to me, the correlation is flimsy.

Every individual holds a short position on medical costs.

If medical costs and the value of medical stocks are correlated, then one can hedge that underlying medical short by going long medical stocks. I don't actually know if that correlation holds. I should have been clearer that I was guessing it might.

I actually don't know the right sort of hedging for medicine - would be great to have some help with that.

I'm going to be more bearish than you and say that people who find stock research "overwhelming" as in the HN strapline shouldn't be investing in individual stocks at all (unless they get employer equity on a very favourable basis, or the individual stocks they're invested in are all ETFs)

That said, I do quite like the idea of an algorithm that hedges risk, but for the average person's retirement fund wouldn't that be best done with a proper fully diversified portfolio minus a few stocks whose performance is heavily correlated with your earning potential? If so wouldn't that be best as actual funds marketed at employees in particular industries rather than a software stock-selection tool.

Above all, congrats on shipping.

The problem I have is, you may have built a better mouse trap here, but for the last 20 years the retail investor -- your customer -- has been the mouse. And few people in your industry acknowledge that.

The stock market has a built-in upward bias of 3-5 percent. It represents the premium over the risk free rate that entices people to invest in equity instead of debt (bonds, treasuries). So retail investors don't "lose" money but they have underperformed the market to a extent that is IMO criminal. Literally.

All of the education, services and tools (like yours) are teaching investing all wrong. Price targets? Made up numbers by analysts? What were the price targets on Netflix before it fell 100 handles (and then clawed half of it back)? The day before the drop CNBC said $600/share. How about GTAT? Jim Cramer loved that stock.

There are some people doing it right, though. Check out TastyTrade.com. These guys have made a massive investment in teaching the retail investor techniques for investing that don't rely on the magic of technical analysis or analyst prophecy. And even more awesome -- they built a trading platform that is free to use and provides tooling to support their principles, which are basically: do many small, high probability trades to give yourself many independent occurrences to smooth statistical variance, and let duration work for you. The platform is Dough.com

I'm obviously not affiliated, just a fan. And I don't mean to take away anything from what you've built. But I think we're just doing it wrong and i want to see that changed.

Totally see what you're saying, and we definitely want to get into the educational aspect at some point. But Netflix fell because of earnings, and GTAT was a fundamentally horrible company (our site wouldn't have recommended it). From what we've seen, retail investors tend to lose money when they invest with their gut, and that's the biggest issue. They hear some news and go and buy that company. They don't know how to do the fundamental analysis, and look at income statements, etc - that's what we're really trying to solve. I agree with not really trusting the analyst target price - we were actually debating whether to keep that there or not, but I disagree that technical analysis can't give you good, long term picks along with a little research.

I'd love to hear more about your thoughts. Think you could shoot me an email at chintan@capp.io?

Will do. Point about NFLX wasn't the drop -- stocks go down and it's almost always stair-steps up, elevator down. It was that literally just days before ER CNBC put an analyst on TV crowing about $600 PT. How many millions of dollars did that person lose for the total viewership of CNBC and other outlets that carried her advice?

You read an analyst report from Goldman saying "we like apple going into the fall, you should buy apple." This is back when Apple is $500-600 a share. That's just the worst advice. You know what would be a lot better for a small investor? If you're bullish on Apple, go buy the at-the-money call spread. It will cost you a fraction of the share price and let you capture $5, 10, 20+ in upside if Apple moves up (depending on how much you want to pay for the spread). Anyway, this is obviously a subject I'm passionate about :)

Congrats again, guys. Enjoy the spike today, HN front page is still the 52 week high on all of our traffic charts!

Agree with your point on the options spreads, but we wanted to gear our focus towards solely stock investments since that's the majority of the retail investor population.

You're right about AAPL being too expensive (back at $600) for the average investor and that's something we're beginning to focus on. We'd like to add more personalization so our recommendations take into account factors such as risk profile, age, account value, etc.

Again, our goal is to help less experienced investors make smarter investments over the long term and teach them "why" along the way.

Thanks for your feedback again! Definitely points we'll be taking into account.

Options might not be the best advice for the target audience.

I can understand why a lot of people think that way. Check out my reply above for more color on the subject.

There are some people doing it right, though. Check out TastyTrade.com.

Your solution for retail investors who are getting burned in high beta tech stocks is to go put on a bunch of complicated options positions? That seems like kind of crazy advice. Maybe just buy some SPY and go do something more interesting than stare at options prices all day.

Sure, you can buy an index and forget it. Or, you can buy the index and then sell a covered call on it every month at 1 standard deviation out of the money. You decrease your basis and earn a monthly income, at the risk only of capping your upside if SPY surged upward. One sd out of the money options will expire worthless 85% of the time. No "staring at prices" required.

It's not your fault if you're scared of options (or scared for the masses). It's because retail investing has been taught and presented totally backwards for 20 years. Options have the same risk as the underlying. They are only more dangerous because they give you leverage. So you trade 1 lots or 2 lots. Your capital at risk in my apple spread example is an order of magnitude less than buying even 10 shares of Apple stock at the then price of 5000+

The retail investor understands rankings and price targets and no load mutual funds and other things we've said are I,portamt. I can teach you vertical spreads in a few hours and that is all you need to use options in your investment strategy.

In a vertical spread I can tell you with certainty that your probability of profit is equal to the max loss divided by the width of the strikes. Max loss is the width of the strikes less the credit you received when you sold the spread. So if you sell the 190-189 put spread on the spy bc you think it will go up, and you receive .35 for the trade, your Max loss is .65 so your probability of success is .65/1=65%. Whether or not that's a good risk to take depends but it's better than buying Netflix because some guy on tv invents a price target.

1 or 2 lots? The margins after commissions are going to be crap (if anything) for big indexes. I know the phrase "efficient market" gets thrown a lot but its pretty relevant here - there simply isn't much, if at all, to be made doing this.

Lets say you have 100 shares of SPY - $19.6k. You propose what - Writing Nov 22 calls? Look at the chain - $0.31 bid for 204, for instance, which is pretty high-risk already, but 205 is to $0.23, 206 down to $0.15. You can even find an index that does this for you - http://www.cboe.com/micro/bxm/ . I'll save you the looking, but it underperforms SPY at 1,5,10 years + inception.

Options are valuable tools for certain situations, but average investors shouldn't touch them with a 10 foot pole.

It seems you're arguing theoretically, and that maybe I moved a little too quick in my previous post and wasn't clear.

What I actually suggested above was buying the SPYs and selling covered calls. The only risk you're taking on is limiting your upside to your strike price.

Tell me this: what can an investor do to increase his probability of success in a trade other than reducing basis? The argument for reducing basis is simple: Reducing the amount you've paid for the shares, making them cheaper for you than somebody just buying the stock, gives you an edge.

The monthly sd in SPY is $9. So yes, if you sell the $205s, 85% of the time the calls you sell will expire worthless OTM, and when that happens if you roll your position forward another month, doing that will increase your total profit over just holding the stock. Limiting upside to increase odds of profitability is the lynchpin of professional trading strategies. And that's what you're doing here.

And yes, selling 1 and 2 lots, commissions do absorb a larger percentage of your PL than on bigger transactions. And complex strategies that require 4 legs like an Iron Condor won't be profitable at that size, it also happens that an IC is a low-risk strategy (and thus small effect on your buying power) so in those cases you can increase the leverage or widen the strikes.

Your attitude about options is understandable given the way they've been portrayed to the retail investor. And everybody should think about what's right for them. But most retail investors buying stock, making directional bets, buying netflix at $500 a share, you think that's less risky than buying a $100 debit spread on NFLX with a higher probability of success and massively less capital. And you think that way because it's how you and the retail sector has been conditioned for 20 years.

And, like I said up top here, the retail sector has underperformed the market. And it's not because of evil HFT firms who do nothing but cheapen transaction costs for everybody. It's because of the way we trade. It can be better. Check out this TastyTrade video covering a study they've done on reducing cost basis with covered calls:

http://www.tastytrade.com/tt/shows/market-measures/episodes/...

> Options have the same risk as the underlying.

Not really. Option pricing includes volatility (beta) and time-decay (theta) in addition to basic price sensitivity (delta). In plain english, an option has a premium not just based on how far from the money (from current price) the strike is but also how much underlying is moving AND how far away option expiry is.

Vol moves are not to be underestimated - if you look at option prices within a buck or two of Intel when they announced earnings, you'll see how implied vol changed.

Lastly, I believe options are too complex for retail, non-active investor to grasp not because of needing to buy 4 legs to form an iron condor or something, but from fact that there are inherently more built-in risks that are very hard to understand, vs simple "company does good, it goes up, company does bad, it goes down" proposition of a stock.

Lastly, i do agree with you that options present a very good set of tools, but like with any power-tool, you should know what you're doing before pressing that "on" button :)

You're missing an important fine point here: I am not advocating buying options. These strategies are selling options. So implied volatility and theta decay are your very best friends.

This "options are too complex" language is just silly. Retail investing doesn't work as it's been taught! It underperforms the market and professional investors, and it doesn't have to. You don't have to run complex positions, selling a vertical spread is every bit as easy as buying stock (one transaction to open the position, one to close it, and sometimes you don't need to close it.)

Anybody who wants to tell me options are risky has to explain this: Suppose you want to capture upside in, say, Amazon. Why is it riskier to sell a put spread or buy a call spread, in either case risking just a few hundred dollars, than it is to buy shares when just 25 will cost you $7500 or more?

The fact that you mistook the value of theta decay and IV in my proposed scenario of selling a covered call makes me think you just don't understand some of these things. And that's not your fault, it's a huge fail IMO that the retail investor has had to learn the finer points of front load vs back load on some overpriced mutual fund but has been taught that options are scary.

Again, I do not advocate for taking long option positions and I definitely think you should check out TastyTrade.com to learn a bit more about the philosophy.

As usual in HN, the meat is in the comments. Thanks for the pointers to tastytrade and dough. Great sites.

Good job on shipping. I can tell you have made this site in Rails just by looking at the 404.html page http://www.capp.io/404.html which people usually forget to change form the standard rails template. Can you tell us what is the hardware configuration you are running on as it is holding up well considering a lot of people are trying it out from Hacker News.

Have you run your %w[Buy Sell Hold] indicators over historical data to see how accurate your suggestions are? It would be really nice to offer this feature for transparency and to keep yourselves honest. It could also improve your product and help users to better understand when you make errors. Does your app do sentiment analysis on tweets? That would be insanely cool if you get it right.

We're in the process of building a backtest for our ratings. We'll be writing about how they perform soon.

That's a terrific idea (the backtest - sentiment analysis is interesting but the backtest could be a core part of the offering).

It'd be interesting to know how much you are paying for your data. If you're doing things legally, balance sheet data and exchange licensing for stuff like this costs 10's of thousands of dollars a year.

We're pulling as much free data as we can but have plans to transition onto a paid data source as soon as we can.

Oh hey, that's awesome, I was under the impression there wasn't any free data sources available. This would make FinTech way more accessible for startups. Which ones do you use?

Shoot me an email at chintan@capp.io and I can go into more detail :)

Quandl[1] is one such resource of free stock data.

[1] Quandl.com

Quandl is great but be sure to truly understand their ToS correctly - they pull a lot of their data from sources that forfeit (or dont explicitly allow) public/for profit redistribution

I'm probably in the target demographic for this (small semi-serious hobby investor) and I like what I see. I'll send more detailed feedback to your site's email. (I figure you folks did the work putting this together, so you should be the first to benefit from feedback.)

Thanks so much! Feel free to reach out to me directly if it's easier - chintan@capp.io

It looks neat. Great job.

For market sentiment you are just showing tweets. How about if you just show if market sentiment is +ve or -ve?

I think you are taking only fundamental analysis into account to suggest buy or sell otherwise you would not suggest GPRO as a buy.

Thanks!

Yes, definitely, right now it is just opinions but we do want to analyze for actual sentiment (bullish vs bearish).

I haven't seen anyone else commenting in the last few hours, but the site has been mostly down for me since 11 AM Pacific. I was able to do my first few test queries and sign up for an account, but it has been unavailable since.

I'm getting 500s on the query page. Getting too much traffic maybe?

Yep, too much traffic. Fixing now, let me know if it works!

I get an error when I try it using BAC

http://www.capp.io/queries/new?query=bac&button=

Dealing with some traffic issues right now. Should work now.

Please note that "cappio" means "loop" (as in, for hanging people) in Italian. Not sure if it's deliberate, but perhaps it's good for you to know :)

We somehow didn't find that out until we'd already built everything out. Considered a re-brand, but we figured we'd go with it :)

It's not so bad after all. http://codio.com, on the other hand... ;)

I got a generic "Application Error" message when I searched "tsla". The website seems to be running very slowly so maybe just a timeout?

Definitely a timeout unfortunately. We're bumping up dynos, so hopefully it'll get better!

I'm getting timeout errors too. Rather than just "more dynos," on Heroku - you may want to try:

- Adding caching static assets/images/etc (Not sure how this is done on Heroku but fairly straight forward with Nginx or Apache). Currently, your assets are taking a full 6 seconds to serve.

- Possibly serving your static homepage etc from one server/Heroku instance and your functional app from another so you don't put the stress of traffic on a homepage on the app server as well.

Edit: Adding this link to be a bit more helpful. https://devcenter.heroku.com/articles/http-caching-ruby-rail...

I tried a mutual fund, for the heck of it. Not there. Looks kind of neat, but my guess is that it's more of a feature than a company.

It is meant for individual stocks as of now. We're hoping it serves pain points for retail investors who need some hand holding when it comes to investing smarter.

Nobody knows if a stock is going to go up, down, sideways or in circles. You know what a Fugazi is?

Sorry, I can't resist.)

haha love the reference :)

Do you guys have an API for queries?

We've actually been considering making it available for others to use. Shoot me an email chintan@capp.io.

Guys, this is awesome. Just wanted to say thank you. This is definitely very useful to me!

Thanks for the kind words! Glad you find it useful. Shoot me an email at jay@capp.io if you ever have more feedback.

Missed stocks from London Stock Exchange (LON). Anyways, cool concept. Congrats.

Only NYSE/NASDAQ for now, but we're definitely going to be expanding out soon!

Where are you sourcing the data from?

Different places right now. MorningStar, FinViz, etc. Transitioning onto paid data asap.

beautiful boys

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