Covestor.com Review, The Community with Proven Self Investors

Blain Reinkensmeyer

Posted on Mon 1st Oct, 2007 08:00:33 PM

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How good of an investor are you really? Ever want to show the world what you really can do?

If so, you need to check out Covestor.com. Covestor.com is the community where active traders build a track record with live data from their online stock broker and establish themselves as the best of the best. Real success is proven with real life numbers, and Covestor has the tools that not only help active traders show off their skills, but also make money doing it.

About

Covestor.com is a web 2.0 online stock community of proven self-investors. As an active trader you can create an account, import financial data from your broker, and use it to establish a track record for your investment portfolio. As your track record improves more and more community members will begin to follow your work. And, once you cross the threshhold into becoming an icon within the site you can actually begin to make money by selling your picks.

Broken down further, from the about page you will find that with Covestor, you can:

• Build a track record. Professional grade tools measure and display your normalized results. These validate your performance and build you a track record comparable to professional hedge funds. Our secure broker link makes it effortless to upload and update your holdings.

• Choose how widely to share your activity. You choose whether to share your track record publicly or just with other Covestor members. Covestor ‘widgets’ also let you export your verified performance and rankings to your personal blog. Members get free access to all Covestor profiles, transactions, and commentary.

• Get feedback and ideas from other Members. See what other members are investing in and why, in near real time. In addition you can benchmark your own performance, and see where you rank.

• Earn financial rewards. Covestor will be adding a regulated investment service. If you choose to be compensated you will receive an annual data fee for every follower you have. Find out more.

The concept is genuine, and has a ton of potential especially once the site grows into a well established community with thousands of active traders. The team leading Covestor is especially impressive, with Richard Tahta, Perry Blacher, and Simon Veingard. You may not know these names off the top of your head but read their bios and you’ll quickly find out Covestor is in some very nice hands.

Registration

Registration is a easy multi step process:

1. Choose a user id, password, etc. (generic information).
2. Import your brokerage data automatically or manually.
3. Wait for activation code via email. This took me four minutes to receive, and once you get activate your account you can then sign in.
4. Edit your community profile.

I found that registration was very simple. Typically you need to attain a registration code (which you apply for), but thanks to the blog here that isn’t necessary, just follow any link through Stock Trading To Go to Covestor and at the top you’ll find a presetup registration key for you. Thanks Perry.

One big thing to note here with registration is that the way Covestor is setup is you have to somehow someway import your brokerage data. I will talk a bit more about this in the last section of this interview, but basically if you don’t have a brokerage account setup, then you aren’t going to be involved in the Covestor community. Covestor is strict about only allowing active traders in as that is their niche they are establishing.

Using the Site, Key Features

Overall the site is very easy to navigate and utilize. After spending an hour exploring the site I was still running into features I had yet to see which really brought a lot of value to my experience. The Covestor team really outdid themselves before launching and has done simply a fantastic of job of covering their bases.

Some features I really like:

• Replicate and Track Member Portfolios – Once you decide to track a member you can get updated on all of their activity instantly if you like and can even setup a fake portfolio that replicates that trader’s activities so you can see first hand how well you would do if you made his same trades. Right now this service is free but eventually (and depending on the trader) down the road you will be charged for such access. Basically if you are going to want to track the best, you’ll have to pay for it.
• Member Status, Earning Reputation – This is really cool and it shows the value of being a long term member with a great track record. There are two main forms of reputation, the number to the right of your name and how many stars you have. The number next to your name represents your “follower months” which takes your total current followers and multiples them by how many months you’ve been followed for. The site gives an example of, “If 25 members track a member for 3 full months that member will have accumulated 75 follower months.” The stars represent how many consecutive quarters in a row you’ve beaten how the index you are comparing yourself to (which by default is the S&P 500). The more stars the better, and once you get 4 stars you achieve “super star” status which you keep for 12 months.
• Comparing Portfolios - This was probably the most useful tool out there as a form of comparing and seeing how good a trader really is. Every member’s track record can be compared to the overall market, you, or the pros which is a variety of different funds.

Another great feature when it comes to comparing traders is the Credibility. For every position a trader holds you can see what their status is on it, their rank on it, and their current return.

As you can see to the left SimonVeingard is holding a position in Amazon.com, and with his current return of 147.74% he has the 3rd best return out of 26 Covestor members that hold Amazon.

Remember, this is all live backlogged trade history, not some return from a stock simulator.

The features list really just goes on and on, and one that is still under development is the Rankings page which I am personally interested to see. When it launches it will display all the best of best traders from the Covestor community and will really help good traders gain ground with new followers and eventually subscribers.

Closing Notes, Ideas

Overall I think Covestor.com has a ton of potential. The site is well designed and being lead by a experienced team of veterans that have seen success many times before. Alongside the ability to prove yourself to the trading world Covestor offers the ability to track other traders, all with a certified trade history instead of a simulator portfolio. The site boasts some amazing features that will keep members involved and in the know with who’s hot and who’s not.

After taking several hours to really let the site concept, layout, etc. settle I only have one constructive comment. I think that the ability to make money off of your trading is great once you establish a strong following of other Covestor members. But, what about those who don’t yet have an online stock broker and are still relatively new to trading? I think it would be beneficial to the top traders and to Covestor to allow anyone to join even without a broker account, just put them under a generic account status that only allows them to pay for subscriptions to member portfolios or something. I think this would bring in more traffic, more opinions, and more critically more revenue for Covestor down the road.

The bottom line can be said simply and clearly. You can talk all the talk you want on Yahoo Finance message boards, show off some great simulator portfolios on multiple sites, but in the end you are nothing without backed numbers and real life results. Covestor.com is THE place to prove your worth in the investment world, and I would be willing to be that within two years once the site grows and achieves a strong following you will not go anywhere else to find the best traders in the world. Just imagine what will happen once they expand the service globally…