Saturday, May 29, 2010

Morningstar Meets eHarmony

DOES THE WORLD NEED ANOTHER MUTUAL-FUND screener? Not if it behaves like all the others. But if it has some fresh ways of looking at investments, can show you what is missing in your portfolio and soon will let you screen for stocks and exchange-traded funds, then maybe it’s worth a shot.

Jemstep ( is an engine designed to match an investor’s preferences to possible investments. The underlying idea is to combine objective analysis, using a proprietary ranking engine, with personalized recommendations.

“We think of it as Morningstar meets eHarmony,” says Chief Operating Officer Kevin Cimring.

Most investors using screeners must select attributes that require a certain level of sophistication, such as specific financial ratios and growth rates. The Jemstep approach is very different. Users may come to the site not really knowing what is best for them. So the Jemstep engine walks them through a process that essentially says, “Tell us a little about yourself and we’ll show you what’s best.”

When you sign up for Jemstep, you are asked a few questions about your investing style and when you expect to need the money. The system’s algorithm takes over from there. You can answer a wide range of questions, which will give you more personalized results, or just a few, which offers just a start. Setting up your full profile includes questions about your tax rate and types of holdings you prefer (domestic or international, stock or bond fund, etc.).

In meantime, the system analyzes more than 100 attributes of each possible investment—such as volatility, returns and costs—and then weights each variable based on the investor’s preferences. The 10 most appropriate funds, plus any that the user may have specified, are displayed with a “Jemscore,” which shows the fit for that particular user, expressed as a percentage (up to 100%).

At present, the Jemstep engine compares 18,000 funds.

Jemstep is just now entering a public beta-test phase, so you can check it out and help the developers kick the tires. It’s free; in the long run, Jemstep plans to generate revenue by providing leads to online brokers and other financial Websites. The idea is to keep the site free for investors.

Cimring says the next step will be portfolio assessment and asset allocation. A user will be able to establish an asset-allocation target for the portfolio. If it’s over- or underweight in certain areas, Jemstep will recommend specific funds to meet that target. “Down the line, it will be a very powerful asset-allocation tool,” Cimring says.

Simon Roy, executive vice president of corporate development, says the company is working on additional tools that will help investors rebalance their holdings. In the future, Jemstep will include account-aggregation services, such as those you would find at You would then be able to use the Jemstep ranking engine to decide which stocks/funds to add to, and which to sell.

Roy says, “We’re trying to close the loop to offer some guidance. We’ll hold their hand through that process. An allocation only helps you if you act on it and stick with it.” Jemstep is a registered investment adviser.

( now allows its customers to trade stocks on the Borsa Italiana, allowing access to 376 listed stocks and exchange-traded funds. Investors can denominate their accounts in one of 11 base currencies, including the euro. Commissions for these trades are 0.1% of trade value, with a minimum charge of $4 and a maximum of $29.

IB’s clients now are able to trade stocks on 10 European exchanges, having already had access to the Austrian, Belgian, Dutch, English, French, German, Spanish, Swedish and Swiss bourses. For more information about these listings and their associated commissions, see

FINANCIAL APPS ON THE IPAD: They’re already here. Nasdaq OMX has ported its Portfolio Manager application to the iPad, and E*Trade has launched Mobile Pro for the popular device. They aren’t the only ones. Are Barron’s readers jumping on the iPad bandwagon? Let us know at .

Published in Barron’s, May 24, 2010. 

Posted by twcarey on 05/29 at 02:09 AM
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Saturday, May 15, 2010

Trading Sites Ford New Streams

FANS OF STREAMING TRADING APPLICATIONS now have another tool to check out.

Last summer, optionsXpress (ticker: OXPS) released a beta version of its downloadable trading software, Xtend, which runs on Windows, Mac and Linux systems. The company ( announced May 3 that the program is now in general release and can be used by any optionsXpress customer at no additional cost.

It takes just five minutes over a cable modem to download and install, and that includes the time spent downloading an update of the underlying program, Adobe Air. Upon first logging in, you’ll be asked if you want to take a tour, or set up the platform and dive in. You can customize the platform, arranging the available tools as you see fit, or use one of the default layouts. You can also change background colors; the default background is black.

One new feature is a custom profile builder, which walks you through the layout of your platform. There are numerous tools for active traders, such as streaming Greeks (options features named for Greek letters), as well as options chains and watch lists. You can also enter a contingent order on Xtend, buying, say, 200 shares of the PowerShares QQQ (QQQQ) exchange-traded fund, which tracks the Nasdaq 100 when Microsoft (MSFT), for instance, hits a certain price.

Xtend also enables a tool more common in the futures world—ladder trading—for stocks, ETFs and options. Using a ladder, or price list, gives you a different picture of how the price is moving. You can place a trade by clicking on the Buy or Sell box next to the price you want to use.

Quotes for the items in your portfolio are displayed in a ribbon across the bottom of the screen. All the tools available to you are indicated in icons below the quote ribbon. Those in gray are already on your layout screen, while those in color can be added with one click.

Several thousand optionsXpress customers have been critiquing Xtend since last summer, and Fisher says he believes the platform now is “rock solid,” after incorporating numerous suggestions.

One feature that will please active traders who use multiple computers during the trading day is that settings will follow you from one computer to another because they are stored on the server side. “No matter what platform you launch Xtend from, it will look like it did when you closed it down [after] the previous use,” says David Fisher, CEO of optionsXpress.

Depending on how many tools you load at once on the screen, Xtend can look pretty busy, especially with the streaming quotes and constant updates. Infrequent investors might be overwhelmed.

STREAMING ON ZECCO: Zecco ( has also launched two Web-based streaming applications. Zecco Streamer Lite gives traders free real-time, streaming quotes from the BATS exchange (an electronic communications network also known as the Better Alternative System), including last-sale information for more than 1,000 of the most commonly traded equities. It also includes a trading module, a real-time Twitter investment feed, and access to the ZeccoShare sentiment indicators.

Zecco Streamer includes all the features in the “Lite” version plus other tools, such as Level I streaming quotes, streaming charts with technical-analysis overlay, streaming options quotes and news feeds. The Streamer is $19.99 a month after a 30-day free trial. The $19.99 seems like a lot, given the tools offered, although you get 10 “free” stock/ETF trades a month at Zecco if you have more than $25,000 in your account.

VANGUARD CUTS FEES: Vanguard ( announced May 4 that its customers can trade the firm’s lineup of 46 exchange-traded funds commission-free. Vanguard’s ETFs, designed to track an array of domestic and international stock benchmarks, as well as several segments of the domestic bond market, have very low expense ratios.

With this fee change, the firm is encouraging clients to tailor a portfolio of Vanguard ETFs to meet their long-term goals, contribute to it monthly, and rebalance it periodically, commission-free. In a statement, Vanguard CEO Bill McNabb said the commission-free offer “enables investors to construct a balanced, long-term portfolio of low-cost Vanguard ETFs and add to the portfolio regularly.”

I find it unfortunate that Vanguard is creating more tiered pricing schemes, especially since most online brokers are phasing them out. Customers with more than $50,000 in assets at Vanguard can place other stock/ETF transactions for a $7 commission; if you have more than $500,000, the commissions drop to $2. There are four pricing tiers; details are at

Posted by twcarey on 05/15 at 03:38 AM
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Friday, May 14, 2010

Shhh. Be vewwy, vewwy quiet

It’s been a while, hasn’t it?  Several things conspired to push “The Electronic Investor” out of the pages of Barron’s for most of the month of April. 

EI is one of the few columns written by freelancers (Yours Truly as well as Mike Hogan), so when ad pages are short, or a feature written by a salaried staffer goes long, we are the usual page to eliminate for that week.  It’s been a problem several times, especially in mid-April when I had a column that had a time limit on it due to some pricing specials that the companies I was going to feature were running.  When that column was pushed a week later, it wouldn’t have been printed until the specials had expired. 

Then while I was trying to come up with a replacement column a week later, I had some scary health issues to deal with that kept me out of my office.  After that, we had another week delay due to an editorial decision.  Finally, Mike had a column run on May 3, and I returned after 5 weeks of invisibility on May 10. 

I should have published the column that had the special pricing in it here, but spent entirely too much time getting poked and prodded by doctors and other evil creatures that week to focus on it.  My apologies for letting that opportunity pass by. 

With any luck, we won’t have any more of those delays ever again ... but it’s hard to predict. 

Posted by twcarey on 05/14 at 03:40 PM
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