Trader’s Narrative

The rise of Web 2.0 is really the repackaging of old ideas with a few new technologies. One of the hottest trend in ’social networking’ websites are those focused on the stock market & investing.

Those that were around for Web 1.0 will remember the original investment social networking site: Marketocracy. It allowed anyone to create a track record. If you were good enough, you went into the top 100 (the “m100″) and were given extra attention and privileges. Eventually they spun the idea into their own family of mutual funds.

There was also Don Luskin of OpenFund, a mutual fund that was so transparent, you could not only see their real time trades but even watch a real time video feed from their offices and see their trading stations. I kid you not. Unfortunately OpenFund was a victim of the bubble and imploded. But who can ever forget Luskin’s infamous meltdown live on realmoney.com’s Columnist Conversation? Ahh, good times.

Now, each day seems to bring a new site that mashes together myspace and Wall Street. Here is a quick run down of them (if I miss any, let me know):

BullPoo is an unfortunately names site that is actually quite good. It is what you’d expect in a social investing site but it also has a few neat features. Since I already wrote a review of BullPoo, I won’t repeat myself. Except to add that they’ve grown nicely and attracted quite a crowd.

Cake Financial allows you to track your brokerage account as well as those of others. This is no fantasy and it is no game. All data is real. This is similar to Covestor (see below) but with looser requirements and restrictions. Cake currently can handle stocks, ETFs and mutual funds and has plans to add options and bonds. Currently it is free but it will be monetized later by charging for features like sending email notifications of trades from other members or assessing your portfolio based on what the community as a whole or “strong performers” are holding and trading.

Not to be outdone by these young whippersnappers, the Motley Fool community has come up with CAPS. It is their version of a ’social’ investing and stock picking site. And yes, it does have the obligatory Web 2.0 ‘beta’ slapped on the header. Like Zecco (see below) it is easy for establishe community sites to tweak a few things and come up with a social version. CAPS has a lot of Web 2.0 features like rating, tagging, blogs, and digg style vote buttons but its most innovative feature are ‘video pitches’. These are short videos by people who feature a stock and why it is a buy.

Collective2 is not the typical ’social’ investing website. C2 allows people to create verifiable track records and then to sell their services to others. These can be discretionary based or automated systems. In either case C2 even allows you to plug the signals directly to a broker so you don’t have to lift a finger - except to pick a system and monitor it. Some systems are very pricey while others are quite cheap. And others only charge you if there is a profitable month.

Covestor is probably the most exclusive and ambitious social investing website. Their members must have a $10,000 equity account, a “demonstrated investment experience” and be willing to share their trading with others. Unlike other sites where members input their picks, Covestor pulls the data from the members brokerage account. The idea of course, is that once you have an attractive and verified track record, others can piggy-back on your investment decisions. The part that’s missing is compensation. Who would want to expose their brokerage account to such transparency for no return?

FeelingBullish is all about reputation. The more stocks you rate and the longer (time frame) you use, and assuming you are correct, the more reputation points you will earn. They have also done an interesting integration of blogs, forums and ratings. For most sites these features are separate islands but in FeelingBullish if you read an interesting blog post about a stock, you can also find the rest of the mentions of it easily. It appears that FeelingBullish is no longer active (the website doesn’t load).

HedgeStop is less a social networking site than a fantasy stock market game. You are given $50 Million in fantasy money and invest it however you like. Your picks and portfolio are tracked and compared to other members. You can also invite your friends and create an independent conference to compete within your group. HedgeStop seems an informal and fun place to hang out.

InvestorFace is “a free online community designed to find, review and share investment ideas”. On the site there are different categories for sectors and within them individual stock picks. The picks have a digg like ‘vote’ button so you can see which have gotten the most nods. Other than that, the site seems to be pretty much like a regular forum or messageboard.

MarketGuru lets you create and track the performance of your portfolio as well as seeing how others are doing. The object of the site is to identify “market gurus” or experts. The site ranks members according to the risk they took to create their returns. Then you are allowed you to hire these top performers or “gurus” (up to 3 at a time). On the flip side, if you are a “guru”, you stand to make $5 for every paying member that follows you. Which makes MarketGuru somewhat similar to Collective2 (see above)

Mint is a well established presence in the online financial space. Mint allows you to manage your whole finances online, from checking accounts, credit cards and savings. Now they have moved into the social network side of things by allowing their members to track their portfolios: brokerage accounts, IRAs, etc. Here’s a backdoor to get a beta invite. I’m not sure how “social” it will be but Mint has plans to offer full access so you can buy and sell directly from your account and even pay bills. A complete one-stop shop for your budgeting and investing needs.

PredictWallstreet, as the name suggests, is a site where people can make predictions, keep track of them and see the predictions of others. The user interface is similar to the newly introduced marketwatch sentiment buttons. You call up a symbol and either predict it will go up or down. And then you see what others have ‘predicted’. I can’t help but think this will be a very good contrarian indicator. But only if enough people participate.

StokBlogs seems to be nothing more than a forum slapped on blogs. The site also allows you to keep and publicise a portfolio. But other than that, the features and offering is rather bare. Which probably explains that the site doesn’t seem to have many members nor activity.

SocialPicks is a community of investors that share ideas and exchange views. It has a neat feature similar to BullPoo (see above) which tracks a members performance and gives them a ranking. This is useful because it creates an incentive for a user to stick around and get a higher ranking (MMORPG style) and it gives a signal to the other members about the quality of their opinions.

Stockalicious is very simple and straightforward. Create a portfolio by picking stocks, trading them (buying/selling) and sharing it with the world. There are no bells or whistles here. Stockalicious keeps track of your performance, whether ugly or pretty. If you’re looking for a clean, easy to use site with no confusing features or options, this is probably the site for you. But strangely enough, their forum is one dedicated to ‘neural networks’.

StockFriend is another social networking investment site. As with almost all of them it is in public beta. It offers the usual: picking stocks, keeping a portfolio, seeing others’ stock picks, engage in discussions, etc. They even have a stock picking contest (like many other sites). You can be a member on your own or join a group and participate in a ‘team’.

StockPickr was founded by James Altucher and quickly has become one the most popular of such sites. It looks to be an early winner. Just a while ago it was bought out by thestreet.com which gave it even more street cred and traffic. I find the user interface a bit crowded and confusing. A unique feature of the site is different portfolios which try to emulate great investors like Warren Buffet, Carl Icahn, George Soros, etc.

The UpDown, the brainchild of a group of Harvard students, is the newest website to this scene. Unlike other sites you can earn real money by: outperforming the S&P 500 through your picks, getting votes for your high quality analysis and finally, a commission on everyone who you invite to join the site. The site is in closed beta so you either get one of those invites from current members or you wait for notification. The only qualm I have about their plan is that they don’t quite explain where this money comes from or how much you can expect to earn.

VesTopia is similar to Covestor but they have gone a step further and actually seeded their site with experienced money managers they call “investment directors”. This is probably the best feature since it allows you to peek at the thinking process and strategy going on behind the scene. But anyone can apply to be an “investment director”. The thing I can’t understand is what is VesTopia’s business model?

ValuWiki, as the name suggests is a wiki style community dedicated to gathering information on value stocks. The site allows, in wiki style, for anyone to add, edit or change the information they have. As well, members can create their own blogs and research. To date they have information on 75,644 securities. Although this isn’t what many would think of as a ’social networking’ site, it has great content and a very flexible user interface. The next time you want to research a stock drop by and check out what they have on it.

Wikinvest is what is sounds like it might be: a wikipedia like site that specializes on investing. It has a dizzying array of articles and a very strong community base. Similar to ValueWiki, you can research specific well-known companies like Apple or General Electric. Wikinvest has some good articles on economic and financial concepts like interest rates or oil prices. As well they cover sector and industry data. The coolest feature, as far as I’m concerned, is “WikiCharts”: stock charts annotated with important company milestones or news. So if you ever wondered what effect the confirmation of the 3G iPhone by AT&T had on Apple’s stock… wonder no more.

Worthio is so beta, it is just a screen! “Worthio is not intended to compete with the multitude of finance sites around the web. It complements them. We built Worthio with three specific goals in mind:

1. Assist people in screening stocks by providing easy to use filtering and sorting abilities.
2. Give people the ability to rely on each other for overall sentiment about a stock (bullish vs. bearish) vs. being forced to rely only on analysts and talking heads.
3. Build a community around stock screening.”

Worthio is being developed by Inkling who have previously developed prediction markets being used by corporations and other organizations. Worthio was never really developed and is now defunct.

ZeccoShare is very similar to Covestor but as you’d expect, it is for the customers of Zecco, the no commission brokerage. Right now it is in obligatory Web 2.0 beta. Again, I’m not too sure why someone would choose to turn on full transparency for their brokerage account and let the world in on their trades (along with the security risk of having their account compromised). Zecco also has a blogs section which provides information but isn’t a ’social’ site.