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Monday, May 15, 2006

Welcome to Investor Brain

Welcome to Investor Brain, brought to you by Theresa W. Carey. 

Interested in news about online brokers?  Do you want to find the right broker for you?  You’re in the right place. 

Theresa W. Carey has been writing “The Electronic Investor” column for Barron’s since 1995, and is the author of all 11 annual reviews of online brokers.  This site will expand on the information printed in Barron’s.  The goal over the next few months is to give you the ability to search for the broker that fits your investing style.  Another goal is to produce a page for each brokerage offering, which will include copy from my articles as well as links to other reviews elsewhere on the ‘net.

Coming soon: Interactive forums.  Stay tuned. 

As we pull that database together, we’ll give you access to an archive of Theresa’s columns as well as up-to-date news about the industry.  In addition, Theresa will be posting items that generate a spark in her head that may or may not have anything to do with online investing.  Stick around. 

Posted by twcarey on 05/15 at 10:00 AM
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Saturday, May 13, 2006

Automated Forecasts

IF YOUR CRYSTAL BALL NEEDS some polishing, Greenlight Stocks (http://www.greenlightstocks.com) offers an algorithm that uses statistical and mathematical methods to forecast prices for North American stocks. The site lets you check a 12-, 24- or 48-day forecast for individual stocks or a portfolio and issues a recommendation.

This forecast is based on pattern recognition, which enables the model to identify stock-purchasing trends that might be hidden from the naked eye, and estimates the probability that such patterns will continue in the future.

If you set up a portfolio to track, recommendation changes—for example, from Hold to Sell or from Buy to Sell—will be sent to you via e-mail.

We found this site intriguing, although the layout needs some work. Once you type in a stock symbol, a densely packed page of data appears. Near the top is a recommendation for the stock that you’re examining—Buy, Sell, Overbought or Oversold. You’re shown forecast details, which describe how the model believes the stock will perform over the specified periods.

The model also lets you know how its forecasts have worked over the past month. By clicking on “Historical Prediction,” you can check its accuracy for the past year. The tables also display the average gains or losses the model is forecasting over the various periods. If you’re a swing trader, the data is interesting, although the presentation needs to be cleaned up.

You can try the site free for 30 days. If you sign up, you pay $9.95 per month to track up to 30 stocks. Use the trial period to see how well the predictions work.

LIKE TO CHANNEL Benjamin Graham and David Dodd? Checklist Investor, a program published by Sollee Solutions (http://www.checklistinvestor.com, $49.95) was created to help individuals make better investment decisions. It offers checklists, based on the book The Intelligent Investor, the value investor’s bible by Graham and Dodd. The lists guide you through an investing decision in a systematic way. We examined version 4.03.

The program ships with 14 checklists built in, plus a method for creating a checklist of your own. The lists also can be customized. Patrick Sollee, the program’s author, recommends creating a checklist based on any good book you may have read about investing.

Checklist Investor is easy to install and to begin using, but it requires quite a bit of manual data entry. Some of the items in the checklists, which query the user about the historical performance of a stock or mutual fund, could be automated via the Internet.

You can store all your favorite online investing sites in the “Internet Research” area of the program. The author recommends using Checklist Investor as a repository for all your investing decisions, as well as ideas and additional research. You can grab Web images, such as stock charts, and associate them with a particular stock or mutual fund. There’s even a way to enter your notes from company conference calls, which would be much more valuable if it also linked you to a list of coming calls.

Some of the checklists are extremely lengthy, though they’re full of good ideas for a long-term value investor. This program also is valuable for a novice or an intermediate-term investor, but won’t be much help for the short-term trader. It also needs more robust ties to online data to minimize manual-information entry and make it easier to use.

WHILE THE PACE OF DEALS among online brokers has slowed recently, the integration of last year’s combinations continues apace. We’re keeping an eye on the merger of Ameritrade and TD Waterhouse into TD Ameritrade (http://www.tdameritrade.com), which recently cut commissions to $9.99 per online trade for stock transactions, regardless of the number of shares.

Customers continue to log in through the same public sites as before—Ameritrade clients at http://www.ameritrade.com and TD Waterhouse clients at http://www.tdwaterhouse.com. The two sites still have separate clearing operations, so they aren’t yet integrated. “We’re starting to close product gaps now. Those pieces will keep rolling out over the next few months,” says Katrina Becker, TD Ameritrade’s director of corporate communications. The gaps in question are research offerings that are now available to both platforms. The pricing is the same, regardless of which site you use. The final integration is expected by the end of the year.

Meanwhile, BrownCo customers were to be integrated into E*Trade (http://www.etrade.com) following last year’s acquisition of the former by the latter. We’ll be curious to see how this goes, in view of the problems seen by former Harrisdirect customers when they were integrated into E*Trade a few months ago.

Published in Barron’s, May 8, 2006
Direct link:  http://online.barrons.com/article/SB114687153382445484.html?mod=Electronic+Investor

Posted by twcarey on 05/13 at 09:23 AM
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Sunday, May 07, 2006

A Policy Change at Greenlightstocks.com

My current Barron’s column, Automated Forecasts (link requires a Barron’s Online account), features a site called Greenlightstocks.com, which I found interesting with a few caveats.  When I wrote the piece, the publisher offered a 30-day trial period. 

But between Tuesday, when we fact-checked, and Saturday, when the article hit print, Greenlightstocks.com changed their free trial policy, much to my dismay.

Several readers wrote me on Saturday with emails similar to this one:

“Theresa W. Carey’s article on Greenlight Stocks’ algorithm that uses statistical and mathematical methods to forecast prices for North American stocks has an error in it.  The trial period is not 30 days, as stated in the article, but rather for 7 days for 3 stocks.  This certainly made me change my mind quickly about trying this service, as I am sure others have decided to do also. “

I sent a note to the site publisher, Gideon Vigderhous, Ph.D, who responded with this explanation:

“Hello Theresa:
I do apologize for the complaints you are getting since we changed the 30 day free-trial to 1 week.  The reason we did that is because many people used the free-trial and then tried to get an additional free-trial period using a different e-mail address.  At the time we were giving the 30 day trial, we had a different fee schedule (we were charging as much as $29.95 per month).  Since we lowered our subscription to $9.95 per month, we also lowered the time for the free trial.  Nevertheless, we will gladly give anyone who complains the 30 day free-trial.  Please direct them to us and we will gladly extend their free trial time.

Again, we apologize for any inconvenience this may have caused and thank you for your efforts on our behalf.

Gideon Vigderhous, Ph.D”

One of the reasons I enjoy writing for Barron’s is the short lead time before a piece hits print.  Back when I primarily wrote for monthlies with long lead times, there were often many changes between the time an article was filed and when it was finally printed.  Fielding those complaints—“Your article is way off base!  The price is $49.95, not $34.95!” and so on was annoying.  I can’t think of any other instance in the 11-plus years I’ve been writing for Barron’s when there was a change of this magnitude between the time a story was filed and when it ran. 

Sure, a month from publication, there are often changes.  But in 5 days?  When the site publisher knew I would be covering his technology?  That’s just bad marketing on the part of Greenlightstocks. 

Grr.

Posted by twcarey on 05/07 at 03:54 PM
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