Assets Under Influence (AUI)
I have described some of the advantages of having multiple platforms with followers who understand what you are posting and looking to deploy capital using your advice. Only those who have established themselves as reliable, ethical and follow the laws that govern their region have survived the last few years and even those who have survived have struggled in many cases.
Having a clean record and strong performance is no longer enough. Now you need to grow both your professional network as well as you influence in non-traditional sources of liquidity- mainly found in social networks such as Twitter, Facebook, Discord or Stocktwits. Since many of the AUI are through social media platforms with the ability to identify an account but not the user, they share some (minimal) characteristics with dark-pools and the color is used by the social media companies. Lets call them “Blue-pools.”
Can we begin to quantify and start to gain some quantitative clarity on the made up AUI metric? Yes.
Because the AUI calculation is determined by a large number of variables that can completely change the outcome, the chance of the number being accurate by any standard is very low, however, sometimes it can be an incredibly valuable insight.
For example it may be useful to know you have the capacity to use your AUI to provide liquidity when you want to sell some of the shares you own as part of an over allotment post IPO. (shares used to help keep the price above a certain threshold after going public).
For others it could be used to value the number of followers a social media account has or views on a certain podcast, members of a trading club, users for a crypto brokerage ect.
I broke the calculation into 5 segments for now. To keep things simple and allow for community contribution I intentionally left out the more complex and unintuitive segments.
- Platforms = (Medium of Communication* Followers * Average Interactions * # of capital Deployments) * Average $ Deployed.
Do this for WordOfMouth, LinkedIn, Reddit, Youtube, Discord, Twitter, Stocktwits, Medium, Instagram, EmailRegular, (Email Professional * Clients + Peers # of Frwds) Then add the shares and estimate the second order interactions if this is reasonable.
2. Capital Priority and Amount = Time * (Number of Home Runs*3 X Number of W’s *1 + Number of L’s * -.5) *Number of Trades with an explanation or Strats * Percent gains per year.
Win and losses are determined on a case by case basis using the sentiment from your followers. Home runs are relative to current conditions and follower expectations. Managing expectations is crucial but at what point will followers no longer want to use you as a decision making tool? This changes in a big way according to current conditions and can not be a rigid strategy.
3. Format: Views/Copies Distributed (Using a video for YouTube +having a reel for Instagram that is captivating + having a text version printed on flyers and distributed in mailboxes on Wall St. or at subway stations is a very powerful way of securing new (older) demographics as contributors to your research and financial literacy club/ other institution + Blogs are a great way to use text to give a detailed explanation to followers + Short Text Using Tweets/Stock-twits for time starved audiences + Emails in a blast or personal ideally * Word of mouth could be your super power, if not then likely you can crush it with other formats but remember to * multiply it by the people who hear and act using second hand word of mouth as their source of investment advice including clients of fund managers, sales reps and brokers or advisors.)
4. Language: (Mandarin*4 X Spanish*2 X German*1.5 *French X1.5* Cantonese X 1.3* Hindi X *1.3) + (Others * 1.1)
Languages are a powerful tool to unlock billions of followers eager to enter the North American Equity Markets.
Now lets combine them all: Part 1 X Part 2 X (Part 3 X Part 4) = AUI
Remember, you can take on SO many different strategies to increase you AUI and unlike trying to raise AUM, you can do it cheaply and investors are at arms length. For equity financing, now that restrictions requiring qualified investors only for RTO’s are lifted, this data becomes valuable to investors, underwriters, promoters, Influencers, BD, regulators and of course the company owners.
Next’s let’s talk about how the exchanges are using rebate arbitrage to influence price action on equities and what this means for investors.
I will also post a follow up with a breakdown of my AUI and a few others with completely different multiples to see how it works out and try to make it somewhat accurate with the help of some data scientists.
With investors being categorized as assets or liabilities (they are literally put into 3 categories, retail- asset because they provide income in the form of order flow/liquidity and commissions, HFT/PropShop- Neither, more of a COG as they are a necessary expense to the exchange passed along to consumers and lastly institutional investors are the liability to the exchange because they now have to pay them no matter what for simply showing up with non-stop using our now higher commissions. In what is called “liquidity rebates” where those who can afford expensive membership fees and don’t pay commissions, but instead receive money based on the size of the contract no matter what.)
What happens when retail outperforms institutional investors? They just tilt the playing field until they get the money back… find out how to tilt it back by following me!
