kaChing

Now everyone can mirror the trades of their favorite money manager in real-time:

"Daniel Carroll, who started investing when he was 15, thinks he has a way to let average investors learn about investing while experts manage the money. In 2008, he started kaChing, a Web site where 400,000 amateur and professional investors manage virtual portfolios. Others have logged on to see what the investors on the site are doing and make the same trades in their own real portfolios.

On Monday, kaChing is to add a new twist. Customers can set up brokerage accounts that automatically mirror the trades of a money manager, some of them professionals." New York Times

Anything that improves on performance accountability is a good thing in my view. If the platform works, it will create a competitive playing field so that the best investors and traders out there will receive the respect and opportunities they deserve.

However, the main concern I have (and others like Tadas Viskanta have expressed) is how investors may use this new feature. If investors use it to "chase performance" (which is likely) and invest their money only with the top performers for any given period (most likely over the most recent time frame), I suspect they'll be unhappy with their long-term performance especially if they jump ship once the hot handed money manager's performance fades and the recent outperformance isn't consistently sustained. We've seen the same thing occur in how investors pick mutual funds and other investments. In essence, today's top money manager may be (and is most likely) tomorrow's biggest loser and while kaChing has done some good things to avoid that problem, it is important to at least acknowledge this problem if you plan to integrate their service within your overall investment plan.

For more info on kaChing, read more at The New York Times or visit the website directly at kaChing.