The critics of Covestor have long opined that the site’s accounting did not present an entirely accurate picture of an investor’s skill as cash was not accounted for. This discrepancy made the system easy to game as an investor could take a series of very small positions, and if the positions were winners (or losers), his or her account would shoot up (or get taken down) by the sum total of the percentage gains (or losses). For example, a trader with an account worth 10K could buy $100.00 worth of a stock, and if he sold the stock for a 10% gain, his account would show a 10% gain, rather than a gain of 1/10th of a percent.
It appears that Covestor has made the change to allow accounting for equities and cash.
If a visit is made to my Covestor fact sheet, the graph which shows my performance will now allow users to click on a tab which reports my performance with cash and equities combined, or with equities only.
Except for brokerage issues (Covestor does not allow auto-reporting from all brokerages, but they do accept auto-reporting from the majority of brokerages) this development makes it possible for every trader/investor who wants to prove his or her investing acumen to do it accurately and transparently.
If transparency is important to you, consider asking your favorite stock trader to prove him or herself on Covestor.
Wow, that makes quite a difference when you look at Tim Sykes returns! I haven’t been on that site for a while because it was so wrong. Thanks for the heads up.