Saturday, July 20, 2013

Check the Buzz on Apple: Stocks in Social Media

A new site tracks what stocks social media are talking about. Is the sentiment good or bad?

Ever wonder what people are saying about your stocks? Tracking social-media sentiment about companies has become a regular part of portfolio management for many traders and investors in the last couple of years. If you’re one of them, or just curious, it’s definitely worth looking at a new Website from Market Prophit.

Marketprophit.com, which is free while in beta testing, displays interpretations of conversations taking place on a variety of social media, delivering bullish and bearish signals to members. It’s an intriguing idea, particularly because the signals are generated in real time, using quantitative analytics.

Stocks that are the focus of social-media attention, primarily from Twitter for now, show up on the Top Ten and Bottom Ten lists, where they are ranked by a sentiment calculation that ranges from +1 to -1. The more positive the reading, the more bullish the sentiment.

These lists automatically update about once a minute, or you can refresh your browser to get an up-to-the-second reading.

Clicking on a ticker symbol in the list, or entering a ticker symbol in the search box at the top of the screen, generates an entire page about that particular stock showing the sentiment reading throughout the trading day as well as traditional price and volume graphs. The company page also displays the most recent posts on Twitter about that ticker symbol as well as its fundamentals. The number of tweets posted per minute is interesting, especially for much-discussed companies such as Apple (ticker: AAPL) or Google (GOOG). There’s a “word cloud” displayed for each company, which is a visual display of the nouns and verbs most often used in tweets and other posts on social media.

HEAT MAPS SHOW, by sector or by exchange, what’s hot and what’s not at any given moment, using shades of green and red. There are quite a few sites and online brokerages that use heat maps to indicate price movement and trading volume, but this one shows the stocks, by sector, that are being talked about. A recent sentiment heat map for technology stocks, for example, showed bright green for Microsoft (MSFT), meaning the talk was positive, and bright red for BlackBerry (BBRY), suggesting the opposite. The “Buzz” heat map gives an indication of the most talked-about stocks; those with the most “Buzz” are displayed in larger boxes.

You can personalize a dashboard with the stocks you’re most interested in, either by typing in the symbols, or selecting from one of the Top/Bottom Ten lists by clicking on the appropriate icon. You can also set up alerts for specific stocks, which will send you an e-mail when triggered. For instance, you might want to be notified if a stock you just bought has a sudden downturn in sentiment, which would let you know it’s time to consider setting a stop-loss order. An upturn could provide an opportunity to write a covered call against one of your current long positions.

It’s free, for now, and provides food for thought as well as some actionable signals. I’d like to see a way to generate a graph that plots the Market Prophit sentiment signals against stock prices as well as the ability to add a sector to the dashboard.

ETF DATABASE OFFERS traders and analysts numerous ways to slice and dice the universe of exchange-traded funds. I like its list of the 100 highest year-to-date ETF returns as an idea generator. Another great tool for those considering exiting high-cost mutual funds is the mutual-fund-to-ETF-converter, which suggests ETF alternatives.

A recently launched tool for the budget-minded is ETFdb’s (etfdb.com) list of the cheapest ETFs, which displays the 100 funds with the lowest expense ratios. Two Schwab-sponsored ETFs, the Schwab U.S. Broad Market ETF (SCHB) and the Schwab U.S. Large-Cap ETF (SCHX) top this list with expense ratios of just 0.04%. For contrast, the site also lists the 100 ETFs with the highest expense ratios.

On that list, the “winner” is the Teucrium Sugar fund (CANE), with a 2.32% expense ratio—which is a higher expense ratio than most actively managed mutual funds. 

Published in Barron’s, July 15, 2013. 

Posted by twcarey on 07/20 at 11:13 AM
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Saturday, July 06, 2013

Best Brokers for Newbies

Among the top places to get started on investing are Fidelity, Merrill Edge, Schwab, T.D. Ameritrade and tradeMonster.

In my last column, I outlined ways for a wannabe independent investor to assess her risk and brush up on her analytical skills. This week, I’ve created a list of online brokers that I think are best suited for newcomers who think they’re ready.

Educational tools and personal support rank high among my priorities. There are many kinds of online brokers, ranging from those who can provide hand-holding to those who encourage you to work completely on your own. You may start out with a broker that offers a fairly basic online suite of tools, and ultimately move on to one of the technological wonders.

The tools to look for once you’re on a broker’s site are those that will help you educate yourself, and those that help you plan your investments. Most brokers have retirement and goal-setting planners as well as calculators that help you figure out how much you should invest in stocks or fixed income. Poke around and see if you are comfortable with the online broker’s site layout and style of presentation. If a site is disturbing to you aesthetically, you won’t use it.

SOME BROKERS OFFER A bricks-and-mortar presence as well as a virtual one. On the “high touch” end of the spectrum, you’ll find offerings by banks as well as brokers that used to be considered full service (and high cost). If this is appealing, you might consider brokers such as Fidelity, Merrill Edge, Scottrade, Schwab, or TD Ameritrade. Transaction fees for stock trading are $7-$10—a far cry from the high fees that full-service brokers used to charge. Most charge an additional fee of $20-$45 for broker assistance.

Merrill Edge is a subsidiary of Bank of America, and its goal is to have a financial advisor in every BofA branch. Scottrade, Fidelity, and Schwab have hundreds of branches countrywide while TD Ameritrade has about 100. All have financial advisors to whom you can talk, as well as ways to set up portfolios of exchange-traded funds without much work.

Capital One last year acquired ShareBuilder, which allows you to set up automatic investments in stocks and ETFs. Instead of buying a certain number of shares, you purchase a set dollar amount, which is then invested in as many shares as you can get (including fractions of shares). This is a good way to get started, especially in an IRA, by investing some of your cash monthly or quarterly. You can also make real-time transactions at ShareBuilder. Broker-assisted trades are another $13.

TD Ameritrade’s Website is fairly easy to navigate; one consideration here is that it also has a high-end trading platform, thinkorswim, that you could grow into over time. TD Ameritrade customers can also opt to work with an advisor through its AdvisorDirect program, which includes a consultation for no fee. You can design a relationship with an advisor that varies based on the type of support you want. If you’d prefer to go it alone, there are numerous educational tools on the site.

E*Trade also has offices, but they are typically sited in larger cities. Its Website contains numerous planning tools that can help you figure out how much to put away, and where to put it. Fidelity schedules quite a few in-person educational seminars, and it also recently launched an interactive online learning center.

Another broker that I like for novices, tradeMonster, is aimed at options traders. What I like most about the site is the way it has structured the trading process through its TradeCycle. Customers are encouraged to do their homework, develop and test a strategy, and think about how they will exit the position in time.

The goal of tradeMonster’s “I Want to be a Trader” Webinar series is to help traders gain solid investing knowledge and deepen their understanding of how to trade stocks and options. I downloaded an archived Webinar (many are free and don’t require a customer account to access) called “A Constructive Approach to Covered Calls,” which I found very useful.

Once you’re ready to open an account, you’ll need to have your Social Security number and an address to enter (not just a PO box). You can set up direct transfers from your bank account, as well, by supplying the account number and the bank’s routing number, so have those handy.

Published in Barron’s, July 1, 2013. 

Posted by twcarey on 07/06 at 01:42 AM
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