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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