Financial sites MarketWatch, Cake get in on social networking

Financial advice takes a turn with the introduction of social networking features to Dow Jones' MarketWatch.com and Cake Financial, a new, entirely user-based investing community.

Just this week MarketWatch added MarketWatch Community, a Beta offshoot where users can post comments, rate articles, and try their hand at market forecasting.

Cake Financial, currently in Alpha, passes over an authoritative analyst voice in favor of a "Social Investing Revolution" allowing users to view the real-time performance of community members with similar profiles. During sign-up, users fill in their investment style, growth goals, history, and education level among other questions. They still build their own networks by adding family and friends, and can create account preferences like an automated stock watchlist.

Cake then serves as a command center for tracking individuals' real-life portfolios, which members can associate with a brokerage account. Cake offers value by encouraging users to compare their performance with other members' portfolios. The site also serves as a clearing house for tips and advice.

Some MarketWatch Community features resemble Facebook story feeds.

Interestingly, the financial authority that has for so long distinguished top-tier brokerages and publications now (to varying degrees) takes the back seat and invites users to the wheel. For MarketWatch, the social networking element manifests as one experimental Web site section, a response to users' growing expectation of involvement in online activities, and most likely also a practical way to turn pages. For Cake Financial, social networking is a full-fledged business model that offers real-time results in place of an expert's speculation, figuring that the best test of market forces is actual portfolio performance.

Cake Financial's Watch List shows how many users also own each stock.

Cake's use of member accounts is heady, but also potentially problematic. Assuming the tips portion takes off, users will want to align their portfolios with that of the highest-performing member. It is no longer possible to beat the market when you have become it. Of course, this may not be Cake's fate. Instead, high-performing users may mutually benefit, improving stock performance as a pack.

While both sites offer satisfying selections for user interaction, MarketWatch Community takes the safer route by focusing user activity on its expert's articles; MarketWatch Community is ultimately a brand enhancement. Cake Financial, on the other hand, offers something truly new, and much riskier, by letting users' portfolios and personal knowledge guide investment decisions.