Covestor

A new website called Covestor (www.covestor.com) has just launched with the objective of sharing your investment information.

The premise is that you, as an individual, may be an expert in a specific sector (say technology) and your investments in stocks in that sector do well. If you want to venture into other sectors then you can watch what other investors have selected to invest in in their areas of expertise.

Similar to Peter Lynch's book One up on Wall Street where the street level investor has an advantage over the hedge fund because of their local and intimate knowledge of the product and their lack of constraints.

The site is owned and run by Rikki Tahta who has previously created and run successful investment sites that have subsequently been sold to Thompson Financial, Jupiter Communications, Merrill Lynch and Amazon.com.

The way it works is that you register on the site and create a profile for yourself. You also enter your username and password for your brokerage account. This allows Covestor to confirm your trades and your portfolio value.

None of this information, however, is viewable by anybody else. If you want to remain anonymous then you create a screen name that won't identify you. All of your investments are normalized to percentages so that nobody knows your net worth.

From what I can work out there are 2 reasons why you would join Covestor.

The first is to barter your investment skills and knowledge in your area of expertise with others. They watch what you do best and you see how they've traded and copy them if they're good at what they do.

The second is to build up an audited reputation of your performance. At a later date, Covestor will give you the opportunity to earn fees on your investment advice. In simple terms, you will earn per subscriber to your trades. This, they (Covestor) say, will be done through a Managed Tracking Account by a regulated investment manager within the appropriate jurisdiction of the follower, who will automatically execute trades on their behalf.

This is a similar concept to Collective2 (www.collective2.com) who do the same sort of thing for the futures market allowing people to subscribe to their systems.

ty for the heads up.. this is some very interesting stuff. i like the whole broker verification thing they have going on.

At this point, it is only for equities, not futures.