
SEC Gives Social Investing Site kaChing Green Light To Take On Mutual Funds - jasonlbaptiste
http://www.techcrunch.com/2008/12/15/sec-gives-social-investing-site-kaching-green-light-to-take-on-mutual-funds/
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marvin
There are going to be some major-league blowups related to this site...some
novice investors are going to learn the hard way that past performance is no
guarantee for future performance.

That being said, I'm glad we finally get a chance to publicly review the
performance of a group of hobby investors. An experiment like this one should
usually run over the course of 50 years, but it will be interesting
regardless... Perhaps we will learn something about investor performance, the
need to wear a suit to perform well etc. I'm pretty skeptical that investors
in a public forum will be able to beat the market over a long period - after
all, their investment methods are _very_ visible and will be copied if
successful (which will break any model).

Machine-readable statistics, lots of users..I've been subconsciously wishing
for a site like this for a long time. Even Prosper gave me a lot of new
insights about the workings and not workings of finance.

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byrneseyeview
_Of the 350,000 portfolios on kaChing, 1,500 have actually generated positive
returns over the past seven months, which is no mean feat._

The broader market is down almost 40% in that time. But the standard deviation
of returns is way up. And it looks like they let you short, too.

I am actually surprised, in this case, that there are so few positive returns.
I would expect at least 1% of investors to be betting on financial apocalypse.

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pragmatic
How do you play a "financial apocalypse"?

You'd have to know the exact market timing or shorting costs would eat you up.

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byrneseyeview
You only short with a little of your account, and you keep it constant, i.e.
you always stay mostly in cash and 20% short. Paulson, Chanos, etc. didn't set
up their pessimistic portfolios so they gradually go down if the prediction
comes true, not so they get wiped out.

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gaika
Crazy world, we have web2.0 attack of the clones, now in finance:

<http://stockpickr.com> <http://alphaclone.com> <http://zecco.com>, that's not
counting virtual stock market games where you can sell you strategies to
others.

Funny how people pile on these "top pickers" and create a self-fulfilling
prophecy bubble and then wonder where all the money went.

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pragmatic
This has to be one of the worst ideas ever. And for the SEC to approve
something like this illustrates our regulatory problem. For the love of god
people, don't we have enough financial train wrecks already?

Will the US taxpayer be called upon to bail out the Facebook investor? What is
wrong with you people?

