Loading ...Interesting company kaChing - of course there are challenges around sustainable returns, building credibility, and marketing. But a very interesting disintermediation effort between capital and investment managers.
Would you use something like this?
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Where?
when SEC itself is doubted to conduct adequate biopsies? http://www.nytimes.com/2008/12/16/business/16secure.html
Yes, I would. I think that the investing industry is likely to change a lot in the next few years as money managers find it very hard to beat the market. This will be an useful option.
Alok,
An interesting concept for sure.
But to answer your question, no, I don’t see myself using it.
Why?
First, I would have questions about the transparency factor, especially in India. Lots of burnt fingers from having followed market manipulators, has made me wary.
Ultimately, if it has to be someone else’s call that I trust, it might as well be that of a fund house, with some accountability, with a certain team effort and specific declared investment guidelines. The cynics will point out the manipulation possibilities there as well. But you can pick the more credible AMCs, amongst them all.
Look at http://moneyvidya.com
They are trying to do something on similar lines.
In India it’s too difficult; brokers don’t provide an API for auto-trading for instance (if one were to “automatically follow trades”). And then SEBI does not allow portfolio advisory services to do a lot of things - leverage for instance is a no-no, you can’t be net short, and so on. In fact SEBI has to come out with a framework for advisers - something that has existed for decades in the US.
India has the additional issues of handling shorts through margins and futures, rather than borrowing stocks (which hasn’t generated much interest). In the cash market, rules and transaction costs are different for intraday trading than for a settlement based system.
But I’ve seen it in use - I have a Short only strategy that’s online and I know a few people that actually trade based on it. A few other bloggers also provide online tips and diligently track their performance using google docs and publish details. The “tip” market is even bigger - people pay 1000 to 5000 Rs. a month to get someone else’s views on what to buy and sell (and the whole thing is done online only)
Now bringing in a covestor type thing is tough (getting brokers to sign on or indeed provide an API is out of the Q) A ka-ching style thing may be interesting, but the “tip” crowd won’t participate primarily because the way money ismade is by hyping the performers and ignoring the bad calls, not possible in a transparent setup.
I have seen some excellent investing strategies come from very unknown sources…and it is true that they don’t have the capital to manage, so they do the online tip/blog thingy. But anything of that sort will have to attract the trading crowd: and that means futures/options. Not many have cracked that yet - and the market isn’t very huge in numbers, just about 500K at the max.
It’ll be time in five years perhaps. I wish I could be more optimistic. But after going through it all, reality has done a lot to imagination.
tb
btw, successful models of this kind (i.e. whatever got an exit): Stockpickr.com (sold to TheStreet.com in 2007), clearstion.com (sold to ETrade in 99). Community investing, following other folks etc.
Apart from the covestor/cake thingies, there’s motley fools CAPS which has a huge following. In India, there’s rediff’s share bazaar game, moneyvidya.com, khelostocks.com, moneycontrol’s moneybhai etc. TheEquityDesk.com has a couple of value portfolios that are updated regularly. Another couple of investing groups I frequent publish individual portfolios on a regular basis.
From this one might be able to create a community mutual fund of sorts but the SEBI rules are prohibitive and very anti the small advisor.
Btw, if anyone has ideas or would like to discuss, happy to talk - deepakshenoy at gmail. There’s always room for optimism!
whichever way, the real jewels worth following don’t seek public attention. In India, they become one of the nav-ratnas of the big business houses here that one hears of in drawing room conversations once in a while
See Folio investing which was a company started as FolioFn in 1999. Disruptive innovation is hard to do in the financial space but if you are successful the payoff is big.
In India doing something disruptive in financial services is very hard because regulators tend not to encourage innovation and current incumbents are quite successful at blocking innovation.
Sanjay Mehta’s point on trust is also a good one.
Nice concept let’s see is this change INDIAN economy.