Posts about investments

Another industry disintermediated

Here’s another industry opened up by the internet: mutual funds and financial advise.

Covestor – a company in which I have a small investment – just introduced its new multi-managed account service. What the hell is that? I had to have it explained to me, too. Think of it this way: It opens up the mutual fund with transparency to and control by the investor.

Here’s how it works: You can pick an investor whose strategy (and luck) you like and say, “Do whatever he says.” When he buys Apple, you buy Apple. When he sells, you sell. When you decide to stop following him, you get rid of all the positions he put you in. This investor doesn’t take control your money. Your funds sit in your own brokerage account. Covestor just created the means for you to follow his actions, to shadow him. For that, the investor and Covestor get a small cut. This also means that you can follow multiple investors at a time – just like the rich folks. And for all of them, you know just what they’re doing because Covestor has the means to track their decisions, successes, and failures.

Think of it as Twitter – the idea of following – combined with blogging – transparency – but about money, your money.

This thing is built for someone like me because I’m a lousy investor. I bought Google at $512. I still have a f****g Time Warner Stock. I bought Sirius. I held onto my Microsoft. Get the picture? I finally cried uncle – actually, our family friend the broker made me cry uncle – and put all my money in mutual funds. But that is almost entirely opaque. And I do miss out on the fun and control of trading myself. I plan to use Covestor’s CV.IM with a small start to see how it works for me.

Fuller disclosure: Covestor was founded by Rikki Tahta, who was a fellow board director of mine on Nick Denton’s last company, Moreover. He’s a tough and brilliant businessman, so I invested along with him – I followed him and now I can follow others.