The Secret of Social Relative Strength and Stock Picking

Way back when I started Wallstrip in 2006 (before Twitter and Stocktwits), I was sitting with Fred Wilson riffing on how I thought Crocs was a great ‘undiscovered’ stock. The price was going up but people (investors and traders) were not taking it seriously. I pointed Fred Wilson to YouTube and there were tens of thousands of people talking about their Crocs in videos. Sure enough, the stock continued to climb and climb. The stock had strong relative price strength but a low social relative strength.

If I could find more public companies with strong price relative strength but low social strength I was on to something.

It was a potential catalyst that hedge funds and institutions would not have yet thought about or cared.

That same strategy works for me today in 2020 and it is even easier for me to spot the social relative strength because of Stocktwits.

All I do is look for the strongest price relative strength stocks with the least amount of people that SHOULD have interest (retail traders, prosumers, institutions) not ‘watching’ or following the stocks.

Examples the last few years continue to be $POOL $MKTX $FTCH (FarFetch – I am long) $Z (Zillow – I am long).

Eventually the great companies and stocks DO get discovered. That does not mean they will stop being great stocks. Some may get better.

For me though, I love finding strong price momentum stocks in which the Stocktwits community have not started to follow. They eventually do.