Put Up or Shut Up
When you are running money, everybody wants a piece of you. You might be beating your benchmark, but clients still complain. Shorts spread rumors about your longs. Consultants rip apart your strategies.
Even the kids sitting outside your office or down the desk think they can do better. They constantly boast about their winning stock picks, and brag about the performance of their personal accounts. In America, and increasingly in China, everyone is a StockJockey.
Of course, only your compliance officer knows for sure what they are trading. And they ain’t talking. But now you have a way to track their numbers. And if you are tearing it up, you can even make money off people who piggyback your trades....
Two innovative startups are about to change the face of the financial industry. Today sees the launch of Covestor, and over the next few days we’ll see the emergence of VesTopia. Here’s how they work:
Anyone with a brokerage account can sign up for Covestor. After sign up, Covestor gathers data about your portfolio and trades in one of two ways. Either Covestor pulls data in real time via account aggregation service Yodlee, which interfaces with the big five online brokerages (Ameritrade, E*Trade, Scottrade, Fidelity and Schwab). Or, investors can manually upload trades to Covestor themselves. Reported trades are later verified by cross checking against the investor’s brokerage statements.
Covestor begins to track your performance, and then ranks investors by performance. Visitors to the site can view investors by style, portfolio type and a range of performance statistics, including risk-adjusted performance (Sharpe Ratio). And once a visitor has found an investor with consistently great performance, the visitor can pay to “subscribe” to that investor’s trades. Covestor shares the fees with the investor.
Looking to build a verifiable track record? In this day and age it is the biggest barrier to entry in the biz. Now you don’t have an excuse. Good luck.
Covestor and VesTopia: Winners and Losers from Peer to Peer Investing
Seeking Alpha
With Covestor, everyone is a money manager
GigaOm
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