Tuesday, 5 June 2012

RWW Recommends: The Best Social Investing Tool

While social media can't predict which stocks will go up and which will go down (yet), there is a growing case for including a social component in your investment strategy. Traditional brokerages are adding social features, and social-media startups are looking to tap into the investors as a new revenue stream. Which of the crop has the best chance of getting the right mix for your portfolio??

While a portfolio based solely on the whims of social media sentiment is ill-advised, investing can be a social experience. There are investing clubs, employer-sponsored workshops and water-cooler chats about the ups and downs of the market. Talking stocks (and bonds and such) can be empowering and help people feel more comfortable as they plan for their future.

Until now, however, social investing has meant little more than traditional brokerages and Wall Street news sites adding discussion boards. Despite the rise of social media and the increasing number of ways people can connect online and through mobile devices, options for a social approach to investing have been stuck in the dot-com era.

The San Mateo company behind MotifInvesting launches its product officially today. In addition to a social component modeled after Google+ (where you can choose who to share posts with), Motif has created a series of portfolios based on popular or timely themes. That lets users purchase, for $250, a stock portfolio such as Caffeine Fix (companies centered on coffee production and consumption) or Renter Nation (for investors who believe Americans are going to be gun-shy on new home?mortgages?and choose to rent).

Co-founded by former Microsoft executive Hardeep Walia and hedge fund manager Tariq Hilaly, Motif is designed around the concept of investing in ideas, as opposed to individual stocks or companies. Walla said the two hatched the idea over dinner in 2010 while they were talking about investments.

"If we liked the idea of, say, mobile, Tariq could have a team of analysts do the homework and immediately put money to work. I, as an individual, could not do that," Walia said.

The site has also been designed to be completely transparent, Walia said. Each of the ideas - or motifs, in company parlance - can be easily compared to major indices. The stocks within each motif can be customized and weighted, and users can see if the Motif community has purchased a motif as is or opted to customize it by changing stocks and weightings. Users can also forgo the social component and choose not to share their thinking about particular investments.?

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