Just over a month ago, we reduced the size of the Cake Financial team just as many companies have done, to respond immediately to the challenging economic environment.  Since Cake is all about being transparent, we communicated this internal news though our blog as a way of ensuring that everyone involved with the company knew what was happening.  The most important result of that post was that a few of our impacted teammates received job offers within a week or two of leaving Cake.

Today, we made the difficult decision to reduce the team further as a result of recent unforeseen events caused by the worsening economic situation.  This move puts Cake in a position to weather the protracted downturn successfully for the next two years.   It is a sad day for all of us to have to say goodbye to our colleagues who brought such passion, commitment and skill to the idea of improving the way 50MM individual investors manage their brokerage and retirement accounts.  If you are looking for top quality engineering and product talent, please contact me immediately at jobs@cakefinancial.com and I will put you in touch with them.

The team and I believe that individual investors need more help now than they did when we launched the company in September, 2007.  This is even more true in today’s markets when trusted firms like Merrill Lynch and Lehman Brothers can virtually disappear overnight, and individuals watch helplessly as their retirement accounts do the same.  All members of the team, both those departing and those remaining, still believe in the company and its mission and want to see Cake succeed.  They are a classy group of people, and I am honored to have had the pleasure of working with them.

Today’s energy markets are booming, and that’s fueled demand for new ways to invest in the sector—including exchange-traded funds, or ETFs.

ETFs are investment vehicles. They work much like index mutual funds in that they hold assets in quantities mimicking an index. But, unlike mutual funds, ETFs trade on an exchange, like a stock.

Energy ETFs are simply ETFs that track energy-related securities. Some of them track broad market indices, such as the Dow Jones U.S. Energy Sector Index or the Goldman Sachs Natural Resources Index. Other track specific sub-sectors, such as oil, natural gas, or alternative energy. You can even get energy ETFs that invest only in foreign stocks.

Most investors won’t want to make energy ETFs the bulk of their portfolio—it’s simply too risky. But energy ETFs can be a good diversifier. That’s because they can help hedge your portfolio against rising energy prices, which can drive up inflation and drive down the prices of stocks.

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Hello again - Brian, product guy for Cake here. In my previous blog post, The Product Needs to be Like James Bond, my point was that our product needs to adapt to the times to meet the needs of our customers (and potential customers). Yesterday, we publicly pulled the curtain back on the Investor Quick Check, our first big step in reshaping our product to reflect the desired outcomes of our customers in these crazy times.

If you haven’t checked out the Investor Quick Check already, here’s what it is: a simple report on your performance and risk, benchmarked against the markets and other Cake members, and personalized ideas on what to do next with your investments. We had a lot of reasons for building the Investor Quick Check (henceforth I’ll call it IQC), but let me highlight a couple of the key ones.

Clarity. I’m sure at some point during these rollercoaster market times, you’ve asked yourself WTF is going on? How is this affecting my investments? We wanted the IQC to be very clear and easy to understand. Like most financial sites, we can suffer from toomuchdata-itis, so we really took a hard cut at the numbers and brought it down to just what we think you really need to know. Also, we realize that numbers in a vacuum don’t tell you much, so made it easy to compare your numbers to indices and large groups of Cake members. For example, I know I’m doing poorly this year, but relative to major market indices I’m doing ok - thanks to my super low-risk portfolio. (I’m an index funds kinda guy.)

Ease. While doing research for the IQC, I came across and tried out Gainskeeper. Not to rip on them, they’ve built an incredibly powerful and comprehensive product, but man, is it hard to use. We wanted to make sure the IQC was easy to use, easy to understand, and easy to set up. For example, if I wanted to calculate the amount of risk in my portfolio, I would have to build a spreadsheet, go get historical prices for all the things I own, calculate the standard deviation of their returns, figure out some way to mash all that data together to get a total portfolio view…ugh. Luckily, we’ve got a team of Ph.D.’s who’ve done it already, and now I know exactly how risky my portfolio is.

Education. The funny thing about the IQC is that we didn’t build a single bit of new functionality for it. All of the pieces that make up the IQC was already on Cake, all we did was simplify it. We have a ton of data and a ton of calculations, and a lot of folks have written in to say this is interesting, but I don’t really know what I’m looking at. So we wanted to make sure we picked the important bits of data, made it very clear as to what they meant, and how they’re calculated. We’re also hoping there’s a trickle-down education effect from the IQC - after reading through it, you should have a better idea of how to use Cake to your advantage.

So that’s it. The Investor Quick Check is the first product we’ve built where simplicity, clarity, and ease of use were the main areas of focus. We hope you like it, but we’re certainly not done - your feedback is welcome and appreciated. Thanks again for reading.

You may have heard about currency trading, but chances are you haven’t done it.

That’s because currency trading is tough for the non-professional investor, since it requires a sophisticated understanding of subtle fluctuations between world currencies.

In 2005, however, one investment firm made it a little easier to trade currencies by launching the first currency exchange-traded fund.

An exchange-traded fund, ETF for short, is an investment vehicle. Like a mutual fund, it holds assets, such as stocks or bonds. But unlike a mutual fund, it trades on an exchange, like a stock.

A currency ETF—and there are many today—is simply an ETF that invests in a currency, such as the U.S. dollar, the euro, the Japanese yen and even the Swedish krona.

Why consider a currency ETF? In part because it can be used to hedge against the falling U.S. dollar—which many investors consider an increasing problem.

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Today, we pull the curtains back on a new product, the Investor Quick Check. Check it out here:

https://www.cakefinancial.com/investor-quickcheck

Here’s the official press release - a blog post in non-press English to follow shortly.

Cake Financial Launches Investor Quick Check; Free Report Offers Instant Visibility Into Your Investment and Retirement Accounts and Provides Ideas for Minimizing Risk and Increasing Returns

SAN FRANCISCO, CA, Nov 19, 2008 (MARKET WIRE via COMTEX) — Cake Financial today introduced Investor Quick Check(TM), a free report that offers anyone with investment and retirement accounts a complete assessment of how their investments are performing and generates unbiased ideas about how to minimize risk and optimize outcomes. Cake Investor Quick Check instantly evaluates all online brokerage and retirement accounts and provides insights you can’t even get from your brokerage firm. Cake Investor Quick Check takes about 5 minutes to generate and is ideal for end-of-year financial and tax planning.

– Cake Financial’s Investor Quick Check report helps answer questions like these — How risky are my investments? How is the market turmoil impacting my retirement? How do I compare to investing benchmarks? Can I do more with my investments? by providing the following information:
– What kind of investor am I?: The report generates a summary of how your investments have done over time — going as far back as 10 years — and calculates your average annual investment return (AAR) for your combined accounts. The AAR is a critical piece of information that you can’t get at your brokerage firm or from your advisor. Investor Quick Check then charts your investing performance against the major market indices and identifies your risk profile, instantly giving you important context about how your investment strategy compares to the market.
– How are my investments doing?: The Investor Quick Check report benchmark’s your performance and risk, then analyzes important investing activity including trades per year, average hold time and average number of holdings. Based on this information, the Investor Quick Check gives you a ranking, which is an easy way to assess how you’re doing versus other investors.
– What action do I need to take to meet my investment goals?: After gaining a clear understanding of your financial picture, the Investor Quick Check generates investment ideas that may help optimize performance. Each holding across every investment or retirement account is given a grade and these are then compared to other investor’s holdings to provide important context about your investments.
– Now that I understand my investing picture, I want to share it with others who need to know: After completing the Cake Investor Quick Check, share this valuable information with your financial advisor, tax planner, family, or spouse. Save a copy for your personal records and schedule reminders for future Cake Investor Quick Check updates.

Related Links:
https:// www.cakefinancial.com/investor-quickcheck
http://blog.cakefinancial.com
http://apps.facebook.com/cakefinancial
http://twitter.com/cakefinancial

Approved Quotes:
“In this challenging economy, people are looking for straight talk and clear guidance about their investments,” said Steven A. Carpenter, CEO of Cake Financial. “Cake’s Quick Check report offers an unbiased, holistic view of a person’s investment and retirement accounts and gives them the information they need to understand, and adjust if necessary, their approach.”
“Our goal is to offer everyone an unbiased resource for understanding investment performance and demystify investing by providing complete transparency,” said Steven A. Carpenter, CEO of Cake Financial. “With Cake, you’ll be crystal clear how your investments are performing and you’ll be in control of the outcome.”

Additional Multimedia and Images Available Here:
http://www.youtube.com/user/cakefinancial
http://www.flickr.com/photos/cakefinancial/

For Relevant Cake Financial Coverage:
http://www.cakefinancial.com/about/press

About Cake Financial
Headquartered in San Francisco, Cake Financial Corporation is an investing website that provides actionable investment ideas based on the historical returns of the Cake Community. Cake offers a complete view of total holdings across multiple brokerage accounts and measures aggregate investing performance as far back as 10 years. Investors compare and share strategies with others while Cake aggregates over one million transactions to generate investment ideas customized to the profile of each investor.
Cake Financial is backed by Alsop Louie Partners and a number of angel investors including Ron Conway of Baseline Ventures, Bay Partners and KPG Ventures. For more information visit http://www.cakefinancial.com.

Today’s energy markets are booming, fueling demand for new ways to invest in the sector—and making commodities ETFs more and more popular.

First, let’s review how ETFs, or exchange-traded funds, work. These investment vehicles, like mutual funds, hold assets, such as stocks or bonds. But, unlike mutual funds, they trade on an exchange, like stocks.

Commodities ETFs are simply ETFs that track commodities, such as precious metals, oil, gas, and crops. Different commodities ETFs do this in different ways. Some hold physical assets, so each share in an ETF might present a specified amount of the asset—say, one-tenth of an ounce of gold. Others track the performance of commodities-related stocks or futures contracts.

Most investors won’t want to make commodities ETFs the bulk of their portfolio—it’s simply too risky. But commodities ETFs can be a good diversifier. That’s because they can help hedge your portfolio against rising commodities prices, which can drive up inflation and drive down the prices of stocks.

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So you’re interested in PowerShares ETFs?

First, let’s review how ETFs, or exchange-traded funds, work. These investment vehicles, like mutual funds, hold assets, such as stocks or bonds. But, unlike mutual funds, they trade on an exchange, like stocks.

PowerShares are simply a brand of ETFs. They’re managed by PowerShares Capital Management LLC, which is a unit of a UK-based investment management company called INVESCO PLC.

There are almost 50 PowerShares ETFs available, and they focus on a variety of market sectors.

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Exchange-traded funds. Index funds. What’s the difference?

An exchange-traded fund, ETF for short, is an investment vehicle. Like a mutual fund, it holds assets, such as stocks or bonds. But, unlike a mutual fund, it trades on an exchange, like a stock.

Most ETFs track an index, such as the Dow Jones Industrial Average or the S&P 500 Index. As a result, many people think of ETFs as modified index funds.

ETFs, which are relatively new investments, are attractive because of their low costs and tax efficiency. Because they aren’t actively managed, ETFs typically don’t have high fees. They also tend to have low turnover, to they generate relatively low capital gains.

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Mortgage-backed securities may sound complicated, but they really aren’t.

When you take out a mortgage with a local bank, that bank typically sells the mortgage to another entity—usually a big financial institution, such as an investment bank or one of the two U.S. mortgage giants, Fannie Mae and Freddie Mac.

Those financial institutions take your mortgage, packages it with hundreds of other mortgages, and sell shares of the package. These shares are called mortgage-backed securities.

Simple, right?

If you’re familiar with the term, it’s probably because mortgage-backed securities became controversial during the housing boom of 2004 and 2005.

Around that time, lower interest rates increased consumer demand for loans, and banks responded by creating a new type of mortgage. It was called the subprime mortgage, and it was made to individuals with questionable credit histories.

Banks then sold these subprime mortgages, which were packaged together with regular mortgages in mortgage-backed securities.

With this kind of structure, investment-grade ratings were awarded to billions of dollars of mortgage-backed securities that had subprime mortgages as underlying collateral. Then, in 2007 and 2008, when the subprime mortgages defaulted, so did the mortgage-backed securities.

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Collateralized debt obligations, also called CDOs, may sound complicated—but they really aren’t.

CDOs are simply a type of security, like a stock or a bond. What makes CDOs different from stocks and bonds, however, is that they’re not single securities, but packages of many securities.

Essentially, a CDO is a corporate entity that owns many debt-type assets, such as bonds and loans. The CDO then “securitizes” this package of debt assets, which means it sells shares to investors.

Although CDOs don’t focus on one type of debt, they tend not to invest in mortgages.

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