Market's closed.

If You Want to Pretend Your Stocks Are Buildings, Now You Can

Matt Levine is a Bloomberg View columnist. He was an editor of Dealbreaker, an investment banker at Goldman Sachs, a mergers and acquisitions lawyer at Wachtell, Lipton, Rosen & Katz and a clerk for the U.S. Court of Appeals for the Third Circuit.
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If you've ever dreamed of being able to "process financial information easily without ever seeing a single number or percentage," then you are mad, but also someone has built a thing for you. You wear it on your face and walk around looking at your stock portfolio; be careful not to trip over Radio Shack!

On Wednesday, Fidelity Labs unveiled StockCity, a Sims-like virtual reality game that turns your stock portfolio into a city.

Here’s how it works: the height of the building represents the price of that particular stock; sunshine means the market is up, rain means it’s down. It’s already come up with what could be the first investing app designed for Google Glass and even an investing app for Pebble smart watches that would make Dick Tracy proud.

StockCity is available in 3D form for the 50,000 people who have a pair of the virtual reality goggles made by Oculus VR, a company recently bought by Facebook Inc. for around $2 billion.

The guy in charge of this thing can't even keep a straight face in the story, which ends with him saying that StockCity is "edutainment, which I know is a horrible word."

There's a part of me that wants to like this. One of the biggest problems in finance is that a computer screen can only really graph two dimensions, and there are just so many more dimensions. StockCity is a "3D" thing, but it actually uses dimensions in a weird way. From the promotional materials I count three numerical data points being graphed for each stock: The height of a building is the stock price, and its two-dimensional footprint represents its volume and market capitalization. So that gives you four dimensions: those three, plus the number of buildings straightforwardly represents the number of stocks you own. There are also a couple of lame binaries: It's day (night) if the market is open (closed), sunny (raining) if the market is up (down), and the top of each building is green (red) if that particular stock is up (down). And there are even more even lamer binaries to come: "A flock of birds landing on your Apple stock building might indicate lots of social media chatter" are real words that really appear in that order in this article.

Obviously you could do more. For one thing, the layout of the buildings is not obvious to me, but you have two more dimensions to work with there: High beta stocks could go on the east side of town while low beta stocks are on the west side; high price-to-earnings ratios could be up north while lower ones are downtown. You could swap some of the binaries for gradients: bright sunshine for a strong day in the markets, shading into gray for a mixed day, with rainstorms for a crash and lightning for a flash crash. A vivid sunset for banging the close. All the buildings in this version are gray, but I guess you could color-code for sectors, though which would get red? Are there windows on the buildings? Maybe if the lights are on it means the company is about to announce earnings; little miniature window-washers could mean a history of beating by a penny. A flock of helicopters landing on your building might indicate lots of executive compensation. If the helicopters are getting their rotors tangled with the birds, it means people are complaining about that compensation. Godzilla is Carl Icahn.

No stop where was I? There really is a part of me that wants to like this. The desire to "process financial information easily without ever seeing a single number or percentage" isn't that nuts. A good vision of finance is that it tries to reduce the infinite variables of our complex world into simple price signals, and a real triumph of modern finance is that it allows people to express views on the world by buying and selling financial instruments. For a hundred years or so you could buy Amalgamated Sundries Co. stock if you thought that Amalgamated Sundries was going to make a lot of money, but that was sort of a weird thing for a regular human to think. Now, on the other hand, if you want to express a view on things you might actually care about -- the overall market or the economy or volatility or inflation or oil prices or elections or weather or consumer spending or world peace or whatever -- chances are that there's an index or ETF or derivative or Motif for that. Or at least a well-understood correlation that allows you to replicate your bet in terms of traded instruments.

I've written before about financial markets as sort of an infinite-dimensional map for abstracting future states of the world, but that is of course very metaphorical. You can't look at an infinite-dimensional map. But any step in that direction, toward rendering those infinite variables visually and making them tractable, is cool with me.

I mean, this is sort of the opposite of that, but in a charming way.

Meanwhile, in another part of town, four finance professors wrote a paper to "evaluate economic mechanisms through which weather-induced mood can affect asset prices." Some conclusions:

Using the survey data, we find that sunnier days are associated with optimistic responses related to stock mispricing. That is, investor optimism increases the likelihood of perceived underpricing in both individual stocks and the Dow Jones Industrial Average. ...

We show that sunnier days are associated with increased buying propensities of institutional investors. When restricting our tests to only comparing mood across investors for the same stock and date, we obtain similar results. Coupled with our findings on investor beliefs, the results suggest that the impact of investor mood on beliefs is sufficient to influence financial decisions with meaningful economic consequences. Moreover, these findings establish plausibility of price effects in individual stocks due to mood-induced weather.

Obviously the StockCity guys should make use of this, turn on brighter virtual sunshine at the end of each quarter, etc. More to the point, though: These are institutional investors, professionals who are presumably not opposed to processing financial information with numbers and percentages. And they are distracted from their careful analysis by shiny objects, or by a shiny object anyway, that object being the sun. Another problem with finance is that the human brain can only really comprehend so many dimensions, and technology can't solve that problem in its entirety. It's hard enough to make good investing decisions even when you think you're doing sober careful quantitative analysis. So I guess you might as well treat it like a game from the beginning.

  1. "An investing app for Pebble smart watches." Just wanted to type that again.

  2. I mean, the dollar price per share is wholly arbitrary and maybe the least interesting available piece of information about a stock, but whatever. Berkshire casts a long shadow.

  3. I think? All the pictures look like they have a square footprint? But you could imagine having market cap measured on one side and volume on the other. Also it's "shares outstanding," not "market cap," but in my virtual reality this virtual reality trading thingy makes more sense.

  4. It's terrifying that that's one of like eight data points they care about, by the way. Like, you get so caught up in your virtual stock world that they need to use lighting cues to tell you to turn it off and go home.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Matthew S Levine at mlevine51@bloomberg.net

To contact the editor on this story:
Zara Kessler at zkessler@bloomberg.net