Saturday, August 28, 2010
New Apps With Investor Appeal
HERE’S A COLLECTION OF APPLICATIONS that I’ve recently tested and believe could help your trading, portfolio analysis, or tax reporting. Some are free, or nearly so.
REALIZED (http://www.realized-app.com), published by New Forge Technologies, is a free (for now) Web-based application intended to help maximize your after-tax return. It bills itself as an alternative to the popular software GainsKeeper, used to import trade information onto a Schedule D for tax purposes, and there are similarities. Realized is especially useful for those with multiple brokerage accounts, allowing you to keep track of potential tax problems, such as wash sales in which you buy back shares you’ve recently sold for a loss. Depending on the timing of these transactions, among other things, there can be tax consequences if you don’t pay close attention.
To get started on Realized, all you do is create a user ID and enter your e-mail address, then click on a link to activate your account. That’s the easy part—now it gets a little bit tricky. You have a couple of methods of entering your trading history. The easiest is to go to your online brokerage account and download all your transactions in a comma-delimited (.CSV) format, in which each column of data is separated by a comma and each row starts a new line.
Almost all online brokers give you the option of creating a comma-delimited file, which you save on your computer. This is a step that can create a bit of pain if you’re not comfortable mucking about on your computer for a file, but it eliminates the need to enter your brokerage-account login information, which makes some people nervous. These files load quickly (even one that had several hundred transactions); at this point, you check over your transaction history to make sure it’s correct. You can also enter your transaction history manually, but that can introduce errors if you type the data incorrectly.
Once all the transactions from your various accounts are entered into Realized, the application creates tax lots, or records of transactions and their tax implications. By knowing the purchase date you can specify what shares to sell later on to maximize tax advantages. If you’ve fully or partially closed a particular tax lot, Realized will let you match the sale with the appropriate purchase.
One tricky bit of portfolio accounting that Realized tracks for you is corporate events, such as stock splits or reorganizations, which can change the cost basis of a particular tax lot. Realized will generate a Schedule D for you whenever you want, so you can keep an eye on your short-term and long-term capital gains as the year progresses. The program displays your largest unrealized tax losses, which you can sell to offset your capital gains, minimizing your tax payments.
The main advantage to using an application that looks at all of your brokerage activities across multiple accounts is that you may have activity in, say, your E*Trade account that generates tax consequences when you trade in the same stock in your thinkorswim account. The IRS doesn’t keep track of which brokerage handles your trading activity—your Schedule D looks at all of it together. It’s possible to sell a stock in one account that creates a wash sale when you buy it again in another account within 30 days. Realized will flag these events for you.
For now, Realized is in a late beta-test phase and there is no charge for its use. It’s worth checking out if you don’t have any other tax-management system in place.
FREESTOCKCHARTS.COM, as you might imagine, is a Website that offers (mostly) free stock charting. Published by Worden Brothers, the site also offers “almost-free” tools, including complete real-time data—the data you can see for free is from the BATS exchange platform, an alternative trading system that accounts for approximately 10% of all U.S.-based transactions. Adding NYSE or Nasdaq will run you $2.99 per exchange each month. There is a banner ad on the right side of the chart display; you can turn that off with another almost-free service for $4.99 per month. I simply move my browser window off to the right so that the ad is invisible.
This is a slick little charting application, which allows you to add a variety of technical indicators with a click. You can generate a chart and send it to others via Twitter or Facebook. One of the features that I appreciate most is the ability to look at the components of a particular index or exchange-traded fund using the site’s Watchlist function. I also like the ability to add columns to the tabular data display, such as whether a particular stock has broken through its 30-day moving average.
If you create an account, you can set up your own personal watchlists to track, and share them with your friends. Freestockcharts has its own social-networking capability, but the ability to connect with Twitter is also very useful.
THIS LAST ONE IS A BIT QUIRKY, and isn’t free, but will appeal to those interested in industrial and sector organization. Maptool X, published by Wall Street Images (wallstreetimages.com), uses old-world style maps to show the relationships between companies competing in a particular industry, and takes a stab at visually describing barriers to entry and forces of competition. This creative app can be downloaded from the iTunes App Store for $19.99.
Frankly, it took me about 20 minutes of puzzling over one particular display to figure out what it was describing, but once I got it, I had a great time checking out a variety of industries. I imagine those more experienced at playing video games will grasp the concepts more quickly. I checked it out on an iPhone; I’m sure this app would be magnificent on an iPad.
You can set up particular companies to follow, but the displays that most interested me were organized by industry. The larger companies are shown “protected” by a wall that keeps out potential entrants. If you hover over a company name, you will see some financial data (including market cap), while clicking on the company brings up recent trading data.
The displays will change depending on a firm’s market cap and its position within the industry. Maptool creates pictograms for nine industries, from basic materials to utilities with anywhere from 10-30 subindustries for each category.
These changes aren’t as dynamic as a real-time stock chart, but they will give you an idea of how a particular company fits within its industry. It’s thought-provoking at the very least.
Published in Barron’s, August 23, 2010.