Of all the apps on Facebook, here is one that might actually make you money—depending on how smart your friends are. Cake Financial, a social finance site that lets you track and share the performance of your actual brokerage accounts, just launched …

“Insurance Limitations. Cake maintains an insurance policy covering theft of data, in an amount of $2,000,000 in the aggregate among all users. Losses incurred by users will only be reimbursed to the extent Cake’s insurance policy provides coverage for such loss within the limits of this policy.”

Also, depending on TrustE as a security story is incredibly naive if they’re thinking TrustE is respected among financial institutions, much less consumers (who have almost zero brand recognition of TrustE).

I’ve never invested my money in the market (yet).
However, I used to be a trader in a hedge fund and had a really good chance to see how it all works. Additionally to my MBA in Finance, I read about 30 books on the market, tried to use technical analysis methods to beat the market, researched everything I could on this and made my conclusion: no one ever consistently beats the market just by investing in stocks. You may do it only if you do some kind of arbitrage (the stuff I was involved in).

Ok, I have a virtual portfolio (created on March 29, 2007; after that, I did not have any trades up until today), which beat the market by 50% sometimes. Today, Feb 26th 2008, it’s beating the market (S&P 500) by only 14%. But this does not make me feel like I’m a hero: I know very well that with time I will underperform, because everyone did sooner or later.

The top 5% people in Cake use some techniques that are good for only a certain time but probability that they will underperform is close to 100% (I will leave a small space for error; if you know statistics – you will understand what I mean). I would most definitely not follow them. With their method(-s), they caught a wave that will die soon and if you join them at the top of that wave – you will go down with them, but in your case you will just lose because you entered at the top, as opposed to them, who gained before they lose because they entered at the bottom of the wave, thus they will just get back to their original investment.

Nevertheless, if you want to have fun – this is a good form of it. It’s educational and thrilling, but please do not put all your money into it.
You’ve been warned…
Good luck!
MikeT.

@ Lynx – no, MikeT understands finance. You do not.

Very few people can conistently beat the market. Buy an index fund or get rich enough so you can invest in hedge funds.

Tracking the Top 5% of users may be the best way to lose money. No one will invest in such an ETF excluding a few idiots and the liability to Cake Financial for setting these up will be huge.

Good luck getting sued. Cake Financial is another lame startup focused on fixing a problem that doesn’t exist.

These sites are useful insofar as they provide a community of traders to Q&A with, and it also always you to pratice trading without risk real $$$ (in the case of wall street survivor). Does anyone know if Cake Financial offers a stock simulator?

I sense you may have lost big on stocks and are slightly, well, bitter. Just because you picked bad stocks, doesnt mean everyone else will.

Looks like a good app for the newbie investor as well as another tool for the more advanced user. Might just give it a go.

On Cake you can see people’s positions so there is full disclosure and it also separates the bullsh*tters from the real investors.

I don’t think they need to do a Facebook app though. It was probably in their term sheet…

(I just wish I got a magic dollar every time some one suggested we do a Facebook app. Then would wouldn’t have to raise any more finance

My name is Johnny Rip and I work for the IRS. Thanks for the tip, pals.

Covestor has more than $3.5M in the bank – raised from Angels and strategic partner – they announce that a while back…

Cake just closed A round ~$2.5M – $4M from Bay Partners and leading Angel investors.