VentureBeat

Everyone knows the stock market is tanking, but how is that affecting individual investors? Social investing site Cake Financial released data today shedding some light on how its users are coping with the crumbling economy.

The answer is pretty much what you’d expect: Not that well. At the end of November, individual investors are down 42.25 percent for the year, which is in the same neighborhood as many market indices. During that same period, the NASDAQ fell 42.7 percent, the Dow Jones fell 34.7 percent and the S&P 500 fell 40 percent. And not surprisingly, investment activity has slowed, with Cake users making half as many trades in November as they did in January. They also withdrew 20 percent of their money from mutual funds. (Chief executive Steven Carpenter won’t tell me exactly how many users the site has, but he says, “Our metrics are statistically significant.”)

On the other hand, some Cake users are doing pretty well. Cake classifies its top 1 percent of investors as “elite,” and says they have only lost 13.9 percent. As more people get scared away from investing, the San Francisco startup can tout the fact that there are smart investors on its site, which attracts other users who want to take advantage of that wisdom. It’s also important since Cake wants to make money by selling the habits of its top users to institutional investors.

Cake recently added a stock ranking feature based on the holdings of the top 10 percent of its investors. The company says that a big sign that a stock will do well is if it moves quickly from an “F” to an “A” rating. From October to November, there were 16 stocks and funds that shot up, including Amazon, eBay and Oracle.

[photo:flickr/Afroswede]

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