2011 has been one of the best years on record for investors.
That’s right — you heard me. One of the best years for investors.
I’m not talking about the S&P500 which is still down about 3% for the year. The jury’s still out whether the year will end up in the green or red for investors.
But performance is NOT what I’m talking about.
2011 has been a great year for investors in other ways. Individual investors have never had so much choice, low-cost investment options. This year was a break-through for investors with new investing and research platforms mushrooming up around us as we slept.
We’ve never seen such a real move of the financial industry to move to the same side of the investing table.
Investors haven’t seen content — good content — written by women for women. Data and apps are changing the way we research and invest — investing has become a collaborative process.
The great thing is that I was writing about all these trends in 2010 when I published Tradestreaming.
Now they’re a reality.
So without further-ado (and as the New Year rapidly approaches), let me get to my 11 reasons why 2011 was an awesome year for investing.
1) The Walmart of Investing
The excitement and interest in ETFs continues to run. AUM (assets under management) in ETFs are still ramping, total number of ETFs was over 1301 in August, up 255 from 2010. Sure, we’ve already seen redundant and arcane products hit the market. But, the facts are clear, ETFs are structurally better products for similar strategies than their mutual fund alternatives. While there’s way more to investing than keeping fees low, ETFs have really made that a reality for most of us.
2) Scoot on over to me, Mr. Advisor
2011 was a breakthrough year as we all experienced the groundswell move towards getting the financial industry really on our side. I mean, really on our side. Brokers continue to leave the profession (brokers have begun heavily recruiting from outside the financial industry) and join the ranks of investment advisors (RIA) who have taken on the fiduciary standard of care for their clients.
It doesn’t necessarily mean that we’ll get better investment results but it does help prevent investors from getting royally screwed.
3) Smart crowds, better investing
In 2011, investors had their pick how they’d like to slice-and-dice their investment research. Whether it’s the Keith McCullough trading ideas bull-horn at HedgEye or the new form of whisper number being developed by Estimize, smart ideas are being sourced from pro and amateur investors alike. With the added transparency layer that the Internet brings, we can measure the value of all this advice and we’re getting better all the time.
4) Collaborate good times, c’mon
Investing continues to evolve from being a very solitary process to a collaborative, team sport. Sites like StockTwits and Seeking Alpha continue to be very popular tools for investors to share information and bubble up investment ideas. It’s not just the jibber-jabber that keeps these destinations growing (though it helps), it’s also the fact that you can hyper-fine-tune the type of information and investing style that makes its way through to your screen.
5) Imitation is the sincerest form of investing flattery
AlphaClone has been like a brother to me this past year, as I’ve moved client money into mimicry strategies that take advantage of some of the best ideas of the world’s greatest hedge fund investors.
As I said in 10 things online investors should know but probably didn’t, I’d move money to Hedgeable — the firm is totally bringing well-proven institutional investment strategies (up 11% in 2011) to the general investor at a very LOW cost. Awesomely, they give much of their services away for free (and if you transfer your IRA to Hedgeable, they actually give you up to $500.)
6) Low cost, lean investment advisors
Cale Smith has a great model for startup investment advisors to bootstrap their way to building a viable investment practice. Instead of busting tail at a wirehouse advisor, cold-calling their tuchesses off, aspiring young financial people can get into the business quickly and begin making a living. That means investors get better advice with lower fees.
7) Investing’s Manifest Destiny: Silicon Valley vs. Manhattan
Much of the thought-leadership this year for this current class of financial startup is coming from Palo Alto, not Manhattan. Motif Investing, Wikinvest/SigFig, Personal Capital, and Wealthfront are building out formidable services from the Left Coast. That’s not to say that New York doesn’t matter — it IS the heart of the global financial system — but change is coming from without, not from within. That’s ultimately good for investors.
8) But Women ARE Different
For years, women have been underserved with financial advice. They were talked down to and targeted by marketing as less-savvy, financial customers. Women do face different personal finance challenges than men.
2011 was a year that saw women-focused finance sites break out. LearnVest and DailyWorth are targeting women with respectful, impactful financial content that address women’s needs where they need it. In this bull market of financial content, women investors are finally going long in a big way.
9) Big Data: The next frontier, now
2011 was a big year for big data companies. Now, analyzing big data sets will become a key basis of competition and innovation. This is already happening in the investment space. Wikinvest has already built some buzz for their new SigFig product. This product is based upon Wikinvest’s portfolio manager that allows users to aggregate and analyze their accounts across brokerages. Wikinvest now has access to $20 billion of retail investor assets across multiple brokerage platforms — an analytical goldmine to help investors improve upon their performance.
Jemstep is doing something similar. Investors hook up their brokerage accounts and the Jemstep platform analyzes holdings, comparing securities against best alternatives. The result, like the SigFig offering, is an personalized recommendation engine that derives its advice from a very complex data set. I’ve seen both platforms up-close and in-depth. Both are awesome.
10) An App a Day Keeps the Ad Sales Team Away
In Tradestreaming, I wrote about the eventual move towards investing app stores. 3rd party content and tools providers have always had a hard time marketing to investors (a really costly and time consuming task).
So, the holy grail for everyone involved — from brokerage platforms who aren’t in the innovation business to software providers who can’t get enough users to investors themselves who can benefit from additional tools they don’t know exist — is to integrate all this stuff together.
Well, Seeking Alpha’s App Store didn’t work out the way the company planned — they’ve recently removed the firm’s offering that provided easy access to 3rd party integrations through SeekingAlpha.com from the site. For a content site, a successful app store is a godsend. It gets them out of the ad sales model and free from the tyranny of the pageview.
But the idea was sound — brokers may be a better bet and they’re all pushing out new versions of their APIs (hooks to allow 3rd party applications on their trading platforms). 2011 saw major steps toward investing app stores becoming a reality.
11) Mo’ money, mo’ money
2011 proved that financial content sites, if run efficiently, are proving they can make some moolah. Seeking Alpha is continuously tight on ad inventory. Benzinga got up and off the ground quickly, by deploying a revenue model that can scale quickly. While Covestor still hasn’t emerged as the turn-key revenue model for financial blogging (any financial content provider can instantly get in the asset management game), it still might. The old-school advertising model still works. The future profits though exist beyond the traditional CPM framework.
From all respects, 2011 was a great year for investors, one that harbinged in a real change in how investors get information, how they’re serviced, and how they perform. 2012 should bring only more good things.