Saturday, March 06, 2010


Every January, I send a huge survey out to the online brokers who will be reviewed for that year’s Barron’s Online Broker Review.  This year, I sent an enormous Excel spreadsheet out to about two dozen brokers on January 20. 

A little more than a week ago, a different publication sent out their survey, which will be published in their June issue.  From what other brokers have told me, in past years, this particular reporter has used a Word document that the respondents fill in. But this year, he switched it up and is using Excel.  That’s not a problem, but what he did when switching to Excel borders on unethical, and possibly illegal.

This other publication’s survey is quite a bit shorter than mine, but more than half of the questions asked are lifted directly from my survey.  By “directly” I mean, “copied word for word.”

I think that if some other writer is using my survey as a base document that the LEAST he could do is re-word the questions he’s stealing from me.  I do not think it’s a strange coincidence that we both ask this exact question:

“Average # STOCK Retail Trades per Day, quarter ending 12/31/2009”

His survey includes my caps, and the same time frame.  Even more damning, further down his survey contains this question, which is an exact copy of a question that I’ve been asking for a few years now:

“Is a real-time quote available before the trade is placed?  Does the quote appear when a ticker symbol is entered in the trading screen, or does the customer have to enter it elsewhere on the site?”

His survey also copies, word for word, a series of questions I ask about SIPC coverage and limits.  His survey has a lot of questions I don’t ask, mostly about mutual funds and managed accounts, but those are details that Barron’s readers have not asked me to consider in my 15 years of writing this story.  But there is just one section of his survey that has original questions—all the rest are either directly copied from mine, or only lightly edited. 

A lawyer friend tells me that there are copyright issues involved here, and I’m trying to decide what to do next.  This week I’m finishing up the 15th Annual Review of Online Brokers for Barron’s, which will be in print in the March 15 issue, so I don’t have a lot of free time. 

I’ve found many of my articles reproduced without permission here and there on the web; usually a request to the webmaster to take down the article does the trick.  But this time a source document of mine that has never been published in public is being used.  Maybe the other writer thought I wouldn’t find out about it?  I just cannot imagine a universe where someone would think this is OK. 

OK ... back to work! 

Posted by twcarey on 03/06 at 10:01 AM
Blogging • (0) CommentsPermalink

Lack of Options in Tax Software

I WAS GOING TO WRITE A COLUMN ABOUT packaged tax software and how well the top programs generally work for retail investors and traders. But I just couldn’t get beyond a nagging question for Intuit, H&R Block, TaxACT, and anyone else who publishes these very useful applications: When will you discover that individual investors are trading options, and reflect that fact in your tax programs?

The Options Clearing Corp. reports average daily volume of 14.4 million contracts in 2009. And already in 2010, the average is up to 16.4 million. Quite a few of those transactions take place in retail brokerage accounts, and will have to be accounted for on someone’s Schedule D. But packaged software isn’t addressing this market at all.

For example, users of Intuit’s 2009 TurboTax Premier, while trying to input their transactions, will not find “options” as a menu choice. Options transactions fall into the “Other” category, which means more mouse clicks are needed to get the information entered. Options are considered securities by the IRS, so gains are subject to the same kinds of treatment as gains on stock transactions. The problem most programs have with processing options transactions is dealing with their symbols, and matching up the entry to the correct exit from the trade.

As a couple of online brokers pointed out to me, the IRS does not yet require them to report options transactions. Your 1099 from your broker includes your total proceeds from sales of stocks, mutual funds, and bonds. That left it up to the individual to report options transactions. It’s difficult to measure the “tax gap” that likely resulted from not reporting gains on options transactions over the years.

That all changes in the next couple of years. Once brokers are required to report options transactions to their clients and to the IRS, I’m hoping that tax software helps traders make these calculations. Got that, publishers?

SmartStops nearly two years ago debuted a service that recommends exit strategies for stocks ("A New Way to Tell When to Fold ‘Em,” July 7, 2008). It’s just added Reentry Alerts to tell you when it might be safe to get back in.

SMARTSTOPS ( uses proprietary algorithms that categorize the overall market into up, down, or sideways movements in order to help calculate the best exit points for individual stocks. The service costs $9.95 per month for 10 stocks, and up to $99.95 for 100 stocks, with a 20% discount for an annual subscription.

For an additional $5 per month for every 10 stocks covered, Reentry Alerts signal when the risk profile of the equity you’re following has returned to normal. An e-mail alert will be sent to you to let you know you should take another look at this stock, and possibly buy it back or take off any protective hedge you had put in place. The service doesn’t tell you what stocks you should trade; you have to enter the list of stocks to follow manually.

IN PUTTING TOGETHER this year’s edition of Barron’s Best Online Brokers we’ve come across a number of interesting tidbits that we can share with you before the rankings are released in mid-March.

MURIEL SIEBERT AND CO. ( has introduced a program to help clients with large positions in difficult-to-locate shares earn a little loan income from them. Positions must be more than 50,000 shares or valued above $100,000, and they must be fully paid for or exceed any margin debit in the account. Clients who decide to lend these securities to Siebert’s clearing firm can receive the income based on market value and supply/demand conditions. In addition, Siebert customers can now use add-on Trusteer Rapport Desktop Security Software to protect themselves from any phishing or spoofing attacks they might receive from Websites they visit.

ZECCO (, which has made a push to improve customer service, has boosted staffing levels by 20% and extended help operations by 18½ hours per week. Over 95% of Zecco’s reps now hold a Series 7 license, a major gain from previous years. Zecco also added live chat in early 2009; CEO Michael Raneri says it’s popular with customers and helpful in reducing response times.

MB TRADING ( acquired former partner WizeTrade, a Dallas-based community for traders that has been rebranded MBT World. In addition, its next generation product offering, now called MBT Lightwave, allows traders to create a variety of strategies, back-testing and then sharing them with the community of traders and MBT customers. The firm’s entire suite of software applications received at least one major update during 2009, including an advanced options platform. MB Trading reduced commissions for options, foreign exchange and futures.

TRADESTATION ( just launched TradeStation Strategy Network, a searchable online marketplace of ready-to-trade strategies assembled by independent third-party developers. TradeStation clients can sort, rank and compare trading strategy products by asset class, risk level, frequency of trading, historical return percentages and other criteria. After identifying an appropriate strategy, clients can subscribe, download it to their TradeStation platform and start using it in simulated or live trading.

TRADEKING ( expanded its Webinar and All-Star blogger programs while expanding its Online Learning Center. The second edition of The Options Playbook, written by TradeKing’s “Options Guy” Brian Overby, is an entertaining and effective guide to options trading. The firm has also tested a new Trading Dashboard, which integrates a client’s trading activities with the site’s social-media functionality, and rolled it out to the entire client base in January 2010.

OPTIONSHOUSE ( updated its research tools last year with the addition of Exchange-Traded Funds-centric research, technical analysis and back testing of strategies. In addition, the firm partnered with a third-party performance monitoring service in order to actively measure execution statistics. OptionsHouse also added a mobile application that runs on a broad range of devices, including the iPhone and BlackBerry, with real-time access to accounts and trading.

Published in Barron’s, March 1, 2010. 

Posted by twcarey on 03/06 at 09:58 AM
Published in Barron's • (0) CommentsPermalink