Covestor, a social investing site where people share the performance of their real stock portfolios, came out of private beta this morning. Now anyone can join, and it is welcoming voyeurs who only want to watch other’s performance but not share their own. This should broaden the appeal of the site and provide a no-commitment entry point for people who may be uncomfortable with sharing their personal financial data on the Web (i.e., most of the population). President and co-founder Perry Blacher explains the company’s approach:
It was always in our plans. We had a Catch 22 up front where we had to create liquidity of leaders and so couldn’t start off by saying “Come and track the best investors you have never heard of,” because there would have been no one in the room.
We decided to start off by creating a high-barrier-to-entry community where you had to share to participate to build the base. The long term objective is really about building a mass follower proposition for the world’s best self-directed investors and to enable others to invest directly alongside them (de-insitutionalizing fund management) and that requires it all to be open and public.
You would be amazed by people’s willingness to share and the quality of the guys out there. For example, our average member’s portfolio size is greater than $200,000 in securities alone (excluding cash).
Blacher won’t say how many members signed up for the private beta or the total amount of investments the site is tracking. (Competitor Cake Financial is already well over $1 billion). But he does claim that the site’s members include more than ten times as many money managers than work for any professional investment firm (presumably tracking their personal portfolios) and people from more than 50 countries invested in more than 10,000 different stocks. He also estimates that ten percent of all stock bloggers have Covestor portfolios and says that the top 10 most followed investors have averaged a 123.5 percent return so far this year.
Other enhancements to the site include the ability to sort through members by investment goals or most recently viewed. And you can now import your contact list to make it easier to invite people to the site. The company raised $6.5 million last April from Union Square Ventures and Spark Capital. In addition to Cake Financial, it competes with SocialPicks, Vestopia, and Motley FoolCAPS.
i LOVE the meritocracy of covestor; doesn’t matter who your dad went to school with, what fork you used with your appetizer at the country club, just how good a stock picker you are is all that counts.
Yeah baby open this thing up so everyone can see my pretty results!!!! Jewwwww yahhhhh
This is a great step towards democratizing investment management.80 percent of mutual funds don’t beat the market. And it’s even worse when you account for fees. What a broken industry!
i LOVE the meritocracy of covestor too
I have been using Covestor for several months now. These guys have done the best job of all of the “social investing” sites in my opinion. The value of these sites is in the size of the user base - so things should get very interesting now that they are open to the public.
Such a bad idea. Applying the wisdom of the crowds to investing…great idea except for the fact that the crowds suck at investing. But, shhh… don’t tell anyone because it’s taboo to say anything negative about Web 2.0 principles (long tail, wisdom of the crowds, viral marketing, etc…). The emperor’s clothes look fabulous!
Killer idea.
Please do a story on how college educated people fucked up Silicon Valley
Thomas, unlike other web 2.0 sites, Covestor doesn’t give a crap about below average, average or even above average investors…they only care about the superior ones…and thanks to their software, everyone can see who is the best. Advantage Covestor.
Say it with me Thomass, I know you can do it: M E R I T O C R A C Y
@Thomas
As Timothy said, I think the main distinction here is not that Covestor is leveraging the “wisdom of crowds,” but rather providing a platform of transparency that allows the best investors to easily be bubbled to the top in terms of visibility. If they were leveraging the wisdom of crowds, it would be one big portfolio that was allocated via voting, which I think most people would agree is a pretty bad idea. But I’m sure someone will try it (or already has)…this is Web 2.0, after all
THE PROBLEM : Business Model.
I’ve checked the stats on compete: Vestopia, Covestor and Cake have roughly the same numbers, and they are not close to think about ad inventory. So what’s the business plan? Covestor took $6.5 million AFTER everything was built, so what’s it for? My guess - marketing dollars baby, and lot’s of them, to sell stuff other than ad inventory.
However, that’s one of the most interesting plays on the web today: no ad rev in the horizon, and still some (bold and highly regarded) VCs put money into work, and lot’s of it.
Schonfeld, if I were you, I would ask how they plan on monetizing this thing.
P.S. : when it comes to stocks, following the masses is the one thing you don’t want to do.
Terry, business model is TOTALLY diff. they could care less about ads or marketing…think managed account fees…but it’s good people don’t understand it, maybe thats why they have the market to themselves and could/should be the next vanguard, but instead of no fee funds, just have superior performing managed accounts!
@ Timothy
going into managed accounts, ha? gees, that’s really interesting… Now I’m POSITIVE that big chunk of the investors’ money will be spent on marketing.
Hey TechCrunch - You have a web-related start-up that doesn’t do ads or lead gen!!! and VCs are investing!! sorry - only 2 VCs are investing… the rest still invest in mass-adopted useless crap, hoping to sell ads, with the underlying promise to never break even…
My contribution to this post:
http://www.jogtheweb.com/reade.....rackId=119
Covester is an awesome product. I guarantee that anybody who follows these suggestions will increase their portfolio value and net worth almost immediately http://www.readtheanswer.com/index.php?rta=blog
I thought I was good. My annualized return is over 50% and have never dipped below the S&P500. Yet I’m not even ranked in the top 100. Congrats on attracting quality members and on going public.
Covestor offers the best of traders a chance to prove themselves in real time with real money. As for everyone else, it offers a chance to see exactly how they do that. From my perspective, however good you already may be, if you’re trading without that kind of contact, you’re very likely trading inside the box, and drastically limiting your potential. Some traders really can beat the market, and they’re doing it on Covestor right now.
Save yourself some time and put your savings into an S&P 500 index. Stock prices follow a random walk…some people get lucky and others unlucky. No one can predictably beat the market, especially doing active trading. The taxes and brokerage fees alone put you at a disadvantage.
Covestor is a cool site but there is still ample opportunity for pump-and-dump artists to pray. Think about mimicking the best trades (since they’re published daily) then throwing in a few of your own junk stocks into the mix as you acquire more followers.
My full analysis from a few months ago (I’ve been on covestor for quite a while): http://www.jacksonfound.com/20.....d-dump-20/