Cake Financial (read our coverage here) is out this morning with their end of year, 2008 overview of investor metrics within the Cake community. Read the release for the full picture but a couple of salient takeaways I see here:
- Strong move to cash: While other industry publications get their statistics from fund managers, Cake, as a service overlay on retail brokerage accounts, actually sees the moves that individual investors are making in the aggregate. Cake’s best performers have increased their allocations to cash by 15% throughout the year (probably what made them the best performers), auguring for a bearish take on 2009. The flight to safety and stockpiling king cash has been seen throughout the industry (see here for instance).
- Cake has some strong individual performers: Top individual investors using Cake significantly outperformed all major indices From the release: “Elite investors (top 1%) significantly outperformed every leading market index with losses of just 6.8% as compared to declines of 40.5% for the NASDAQ, 33.8% for Dow Jones and, 38.5% for S&P 500. Collectively, these top individual investors would have ranked as the 13th best performing US mutual fund out of 9,978, according to Morningstar’s Top U.S. Stock Mutual Funds for 2008. That group of funds saw an average return of -35% in 2008.”
- Just one point here. This success may be more the result of just the way a standard distribution works, rather than according any group of investors any particular accolades. One should expect that the top 1% of most investors, using Cake or not, beat most mutual fund managers. The key here is if these same investor can beat the indices repeatedly.
- Just one point here. This success may be more the result of just the way a standard distribution works, rather than according any group of investors any particular accolades. One should expect that the top 1% of most investors, using Cake or not, beat most mutual fund managers. The key here is if these same investor can beat the indices repeatedly.
Cake has processed over 1,000,000 retail investment transactions. As this number grows, I think it will be interesting to see what type of data comes out of Cake’s platform.
