Make Your Portfolio Say: KaChing!

I love it when technology and Wall Street come together in a seamless fashion, and it appears that is what occurred with a new venture that launched officially this past week. The company is called kaChing, and they have created a socially-minded service for the investor community.

Inexperienced investors can use kaChing to learn about investing by experimenting in a realistic risk free environment. They also have the option of using kaChing to find managers to emulate. Experienced investors use kaChing’s SuperCruncher tools to find managers with whom they have common investment interests and with whom they can share investment ideas. In the future kaChing’s best performing managers could have the opportunity to earn a lucrative living from their outstanding performance. Everyone, independent of experience, benefits from the opportunity to create, find and follow specific portfolios.

kaChing pursued the ‘Open Source’ philosophy of dramatically reducing the barriers to adoption to build a critical mass of investors. It then used social networks to accelerate its growth. The first barrier to adoption addressed was the perception that great investors must have an established track record with real money to prove they are capable of earning superior investment returns. kaChing believes that there are many individuals capable of proving that they can generate compelling risk adjusted returns who haven’t yet earned the money necessary to invest. Therefore it allowed members to manage virtual stock portfolios in a realistic environment to attract the largest possible audience.

By building an engaging application that runs on Facebook and MySpace, kaChing was able to rapidly build a user base. As a result, the company has attracted 350,000 members of whom more than 1,500 manage diversified portfolios that generated positive returns over the past seven months (during a time when the stock markets were down more than 30%). That compares extremely favorably to the fewer than 200 mutual funds that have earned positive returns over the same time period. kaChing investor Richard Jones earned a 392% return over the last six months!

Marc Andreessen, the renowned Internet entrepreneur, and an investor in and advisor to kaChing, said: “It makes total sense to apply the open source approach to a business other than software. Finance is a perfect example — kaChing will surface all kinds of financial market information and insight that you’d normally never get to see.” Check it out at www.kaching.com.

As always, I have no direct or indirect personal interest in the company. I just like the idea of showcasing successful individual investors who beat all the smartypants guys on the Street.

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