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Jim Cramer Doesn't Want To Poke YouWhy social networks can't mix with investors—unless they're not social.

By Chadwick MatlinPosted Monday, May 19, 2008, at 3:02 PM ET

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That's why most sites lean toward the Digg model, which aggregates users' portfolios to report which stocks the community regards as good bets. It treats users' opinions as a market, and then tracks the undulations within. These stats are good page-view draws for the sites: unique content that changes dynamically.

Take Motley Fool's Caps, for example. The premise is simple: Channel your inner Jim Cramer and start rating stocks as overperforming or underperforming against the S&P. From there, Caps uses your pick and changes the stock's standing within the community. The better picker you are, the more influence you have to vault a stock to the top of the momentum charts. From there, the "hottest" stocks bubble to the top, just as stories, videos, and photos do on Digg.

Watching the Caps charts soon becomes no different from reading the same stock-picks column every day. Investors are given information about what the rest of the market is doing and then are given the choice of joining the drooling throngs or cutting against the grain. You can get analysis via Caps' users blogs just as you would from a friend whom you respect or a highly recommended money manager. Similarly, drawing upon Caps' users' data, you can sort for stocks that meet your needs, like bankers do with their firms' proprietary databases and software. It's another voice adding to the cacophony of suggestions about which stocks to buy and how long to hold them, and this voice is as momentum-driven as usual. But Caps momentum is different than market momentum. On Caps, users are still reacting to the market, but the market isn't reacting to the users. It's a one-way relationship: The market is the celebrity and Caps is just the adoring fan who obsesses over its every move. For all intents and purposes, the market doesn't even know Caps exists.

Of course, just because Caps is a good Digg-style site doesn't mean that it's especially good at fostering social contact. It quickly turns into an ego-driven fantasy sport by offering awards and incentives to continue improving your score. You might stroke your ego by picking up "Lucky Charms" for a job well-done only to realize that you're nothing compared with the top user. Again, a mirror of real-life trading: The best traders, after all, are the ones who get the top bonuses come Christmastime.

This doesn't breed a friendly environment, which Caps seems to accept. Its in-house lingo is far from Facebook's: You don't become friends with somebody on the site—you become their "groupie." Similarly, your fellow Capsters aren't people; they're "players" whose performances you should track if you yourself want to become a better, more influential cog in the Caps machine. You're never quite interacting with anybody; you're merely playing off them. Unlike a social network, you aren't actually fostering relationships. It's a distanced connection, far from the intimacy that BullPoo and others try to offer.

But the stock market was never founded on intimacy. Caps' terminology alludes to the actual realities of the market, in which trades are being made without buyers and sellers ever meeting face-to-face. Everyone is trading within the same network, but nobody is actually socializing. If that's how it is in the real market, then that's how it should be on the Internet, too.