Social networking sites such as MySpace and Facebook have been boons for teenagers looking for new friends and people trying to find dates. Now the technology, which lets liked-minded people find each other online, is trickling into investing.Online brokerages, including TradeKing and Zecco, plus some stand-alone websites, are using social networking to let investors trade stock tips, compare investing techniques and research companies.
This may sound similar to stock message boards, online forums that allow people to "chat" with each other about hot stocks. Stock message boards, such as Raging Bull and Silicon Investor, became popular during the tech-stock boom of the late 1990s as investing became a national pastime.
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But social investing sites aim to differ from message boards in a key way: by holding users more accountable. Some even track users' real-life trades and let other investors see them. This stands to reduce one of the biggest problems with stock message boards: people trying to use them to manipulate stocks. It also lets users quickly determine which investors have the best track records — and who is worth paying attention to.
"This sounds superior to the old message boards," says James Felton, professor at Central Michigan University, who has studied message boards. "They were too anonymous, and that brought out evilness in some people."
