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TechCrunch: SEC Gives Social Investing Site kaChing Green Light To Take On Mutual Funds

KaChing, which is the most popular investing application on Facebook (previously called FSX), just took a major step in that direction by becoming a registered investment adviser with the SEC. Sometime in the second half of next year, it will allow its members to link their brokerage accounts to the portfolios of the elite managers on the site and automatically follow their trades.

Competing social investing sites such as Cake Financial (which launched at TechCrunch 40), Covestor, and PersonalRIA (which launched at TechCrunch 50) all have the same plan. All of these sites want to disrupt the current mutual fund industry by broadening the spectrum of potential money managers.

Carroll says that risk is taken away by forcing everybody to be open about their investment strategies and showing their entire holdings and each trade as it happens. In other words, the data doesn’t lie.

Very cool. Imagine something like that in India.  Well, we did think of (and even try to build) some parts of it at Moneyoga but ran across a whole range of issues: low Internet penetration and/or PC usage, less overlap between Internet users in India and traders/investors, data cost & accuracy, etc. But there are other sites (Khelostocks, MoneyVidya, etc.) attempting this stuff for Indian markets. 

The bigger point is how the success of this model will impact mutual fund managers. No more free rides on investors’ money?

We have put out a newer version of the Moneyoga site, along with a bunch of new features. Check out this set of posts at the Moneyoga Blog for details:

Feedback, Questions & Answers - Part 4

It has been two months since we last responded to the plentiful - and very helpful - feedback that we continue to receive from Moneyoga users. Do check out Moneyoga.com for a bunch of new features, as well as an updated FAQ. As for your latest suggestions, here goes:

Site Redesign: Better Navigation, Help Pages

Along with new features like F&O analytics, Sector classifications, Watch lists, etc. we have also redesigned the interface at Moneyoga to help users access our content as efficiently as possible. The header now features three sections:

1. Analytics
2. Commentary
3. Community

New Features: Sectors, Watch List, Bonus & Split Candidates

In continuation of our recent series of blog posts, this one will elaborate on three new feature additions at Moneyoga:

• Sector classification for F&O-able stocks
• Daily watch list
• Bonus & split investment strategy

New Feature: Futures & Options - Snapshot & Analytics

As you may have noticed, we have re-designed the Moneyoga site - navigation has been made easier, and there are a bunch of new features for our users. We’ll explain the main ones in a series of blog posts, starting with this one featuring:

• Futures & Options Snapshot
• Futures & Options Analytics

 

Check out this recent post at the Moneyoga blog: Buying Bonus & Split Candidates: A Profitable Investment Strategy?

We ran a series of tests on historical price data for all NSE stocks. Each time a company declared a bonus or a split, we invested a fixed amount. We held it for a certain period, and then computed the percentage return. At the end of the entire test period, we compared the net return for this strategy (and the worst drawdown) with that for the Nifty-50 index.

 

I’m out of town most of next week, and blogging will be on hold until Saturday, December 22nd.

If you haven’t already, check out Moneyoga.com. And watch out for a post on an investment strategy at the Moneyoga blog - we’ll talk about the best approach to trading stocks that have declared a bonus or a split.

Via Paul Kedrosky, detailed global capital market statistics put out by Securities Industry and Financial Markets Association (SIFMA).

Click images for full resolution.

Global Securities Industry Revenues, by Country or Region



Value of Equity Shares Traded

Largest Derivatives Exchanges by Number of Contracts Traded

Global Net Assets of Mutual Funds, by Region

Warms my heart - tons of opportunity for Moneyoga!

Here is a table that shows how the BSE-Sensex 30 large cap index has lagged the BSE MidCap & SmallCap indices this month:

I’ve normalized all values to 100 on Nov 1: the Sensex is pretty much unchanged, while the mid/small cap indices were up 7-8% as of Friday. The story is the same today: while the Sensex-30 & Nifty-50 indices are up a bit, the mid-cap & small-cap indices on both the BSE & NSE are up almost 3%. While the Sensex remains below its all-time high, the smaller-cap indices have been regularly hitting new highs.

Let’s see . . . retail investors driving up small-cap stocks by double-digit percentages every day. Sounds like we might be getting carried away a bit.

I’m glad to share the news that we have managed to crank out the second round of features at Moneyoga.com within a month of the Beta launch in mid-October. Here are the latest attractions:

• Moneyoga Market Metrics
• Stock Screens:
  • Top Gainers & Losers
  • New Highs & Lows
  • Moving Average Crossovers
  • Volume Breakouts
  • Sales & Earnings Growth
• Current Month Option Chains

The stock screens help you find stocks that are worth further investigation - for eg, the top gainers over the past 1 day or week, or stocks breaking up/down on above average volume, might be good candidates for a short-term momentum strategy.

For those of you keen on fundamentals, check out the Sales & Earnings Growth screen - it lists stocks with both the highest sales growth over the past year, as well as those with the best EPS growth.

In all cases, we separate out stocks that have Futures & Options available - these stocks can be traded multiple ways. Another minor, but neat, feature is that each stock page at Moneyoga now shows one or more screens that contain the stock.

[See Deepak's post for a detailed explanation of each screen.]

Yet another feature (probably launched for the first time in India) is the Option Chain, an example of which is shown below:

The table lists all active call & put option contracts for the Nifty-50 index; it’s formatted such that the middle column lists strike prices in increasing order. At a glance, you can tell which options are the most liquid, how much it would cost to put on a straddle or spread position, and so on.

Unfortunately, since a lot of option contracts (even for the current month) are illiquid, we do not always get quotes from the NSE for those. In such cases, we have put in a question mark (?).

Note that clicking on any of the values in the ‘Premium’ column takes you to the NSE page for that specific option contract - there, you can check the option’s bid/ask spread, implied volatility and such. Also, the rows highlighted in green show calls / puts that are currently in the money.

Last - but not the least - is the Moneyoga Market Metrics page: a one page summary of the universe of stocks traded on the NSE. The idea is to capture market internals using a variety of breadth measures, such as -

• Number of Advances & Declines
• Number of New Highs & Lows
• Number of Stocks above/below their Moving Averages

Note the format used: The current value for each metric is listed in green / red (depending on whether it’s bullish or bearish). Below it, you see three numbers in brackets, which are the Minimum, Average & Maximum values of that metric since June 1, 2007.

If you mouse-over any of the green / red numbers (with the mouse icon to the left), an image pops up to the right; it charts the trend in that breadth measure, like so:

I encourage you to check out all the new features, and share your thoughts to help us continuously improve the site. Also, we have put out a new post on the Moneyoga blog that captures the recent round of user feedback & our comments.