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Covestor / KaChing?


turar
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Wanted to ask if anyone here tried using these sites or is a member? I've heard of KaChing a few weeks ago, but learned about Covestor just this week: http://bits.blogs.nytimes.com/2009/12/09/another-startup-wants-to-democratize-investing

 

Seems like an interesting way to get into money management business for someone without the formal education and background.

 

And on the side note (didn't want to open a separate topic for this) -- any Canadians here have experience with HSBC InvestDirect brokerage they care to share, especially with international trading?

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Guest kawikaho

Yeah, I know about Covestor.  I found out about it through this one loud mouth obnoxious guy that is the leader of the ranks there: Timothy Sykes.  I gotta give him credit, though, he's got hefty returns.  Although, I'm pretty sure quite a bit of that is due to the masses on there following into his trades on penny stocks with low volume.  By the way, don't believe the annualized returns.  They make no sense and are completely misleading.

 

Covestor is an interesting concept.  I like it.  Would I use it?  Maybe.  You can do this interesting thing where your portfolio automatically tracks and trades other people's moves.  I would probably spread that risk across 20 of their top investors/traders. 

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Wanted to ask if anyone here tried using these sites or is a member? I've heard of KaChing a few weeks ago, but learned about Covestor just this week: http://bits.blogs.nytimes.com/2009/12/09/another-startup-wants-to-democratize-investing

 

Seems like an interesting way to get into money management business for someone without the formal education and background.

 

And on the side note (didn't want to open a separate topic for this) -- any Canadians here have experience with HSBC InvestDirect brokerage they care to share, especially with international trading?

 

I have been using it since June 2007. The returns are calculated based on the day you join the website moving forward. More specifically from the website, "Covestor uses the GIPS (Global Investment Performance Standards) as a guideline for calculating the performance and risk measurements of individual portfolios. GIPS are the standard measure of accountability and reporting for leading investment management companies worldwide, designed for comparative measurement of the performance of portfolio managers. Covestor members are not fully GIPS compliant as they are not regulated investment managers."

 

The people at Covestor have always been upfront and easy to deal with. I am also one of the first "model managers" and am working through the Covestor Investor Management (CV.IM) system (http://cv.im/models/profile/andy-schornack) with an industry specific focus portfolio.

 

Overall, I highly encourage those of you to take a look at the website and information. The principals are more than willing to answer questions as seen on a blog post at avc.com (http://www.avc.com/a_vc/2009/07/cvim-a-new-kind-of-investment-management-account.html).

 

There are no liars or said to be all stars without the results to back it up. Full transparency on the trades and how the returns are calculated due to the direct link to your trading account.

 

Another website for those of you who are interested is cakefinancial.com. This site will pull your trades/history from your account going back to your accounts opening. 

 

 

 

 

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The problem with people following other investors based on their rankings is the same as that faced by investors choosing mutual funds based on their rankings.

 

It would be interesting to look back in 5 or 10 years to look at all the managers on covestor that are currently in the top decile (top 10 percent) each year and see how they perform relative to the managers in other deciles. On average I expect nearly random performance when measured across that entire group. That would mean that only 1/10th of that top ten percent would remain in the top 10% the following year. I think studies on mutual funds have shown this to be the case. Is there a rationale as to why we should assume that this collection of "investment managers" will be any different?  I'm sure that some of them will defy the odds, but how do you know in advance which one will beat the long term expected performance of the group?

 

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nodnub, I would agree that there is no clear rationale that Covestor, as an example, will be able to support top ranking model managers that can out perform the market year in and year out. Out-performance is always a target and will bring the investors to the table but I doubt any of these firms would make the claim that this is a major strength of their business model.

 

The major benefit of their service as I see it is the transparency they provide their investors at CVIM. Very few mutual funds allow you to see how your money is invested 100% of the time. CVIM provides this transparency as well as more control over how your funds are invested through the different managers by allowing the investors to design risk tolerances among other items.

 

This is certainly a beta service and will only get better with more managers and longer track records.

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