Investor Brain

Sunday, May 07, 2006

A Policy Change at Greenlightstocks.com

My current Barron’s column, Automated Forecasts (link requires a Barron’s Online account), features a site called Greenlightstocks.com, which I found interesting with a few caveats.  When I wrote the piece, the publisher offered a 30-day trial period. 

But between Tuesday, when we fact-checked, and Saturday, when the article hit print, Greenlightstocks.com changed their free trial policy, much to my dismay.

Several readers wrote me on Saturday with emails similar to this one:

“Theresa W. Carey’s article on Greenlight Stocks’ algorithm that uses statistical and mathematical methods to forecast prices for North American stocks has an error in it.  The trial period is not 30 days, as stated in the article, but rather for 7 days for 3 stocks.  This certainly made me change my mind quickly about trying this service, as I am sure others have decided to do also. “

I sent a note to the site publisher, Gideon Vigderhous, Ph.D, who responded with this explanation:

“Hello Theresa:
I do apologize for the complaints you are getting since we changed the 30 day free-trial to 1 week.  The reason we did that is because many people used the free-trial and then tried to get an additional free-trial period using a different e-mail address.  At the time we were giving the 30 day trial, we had a different fee schedule (we were charging as much as $29.95 per month).  Since we lowered our subscription to $9.95 per month, we also lowered the time for the free trial.  Nevertheless, we will gladly give anyone who complains the 30 day free-trial.  Please direct them to us and we will gladly extend their free trial time.

Again, we apologize for any inconvenience this may have caused and thank you for your efforts on our behalf.

Gideon Vigderhous, Ph.D”

One of the reasons I enjoy writing for Barron’s is the short lead time before a piece hits print.  Back when I primarily wrote for monthlies with long lead times, there were often many changes between the time an article was filed and when it was finally printed.  Fielding those complaints—“Your article is way off base!  The price is $49.95, not $34.95!” and so on was annoying.  I can’t think of any other instance in the 11-plus years I’ve been writing for Barron’s when there was a change of this magnitude between the time a story was filed and when it ran. 

Sure, a month from publication, there are often changes.  But in 5 days?  When the site publisher knew I would be covering his technology?  That’s just bad marketing on the part of Greenlightstocks. 

Grr.

Thursday, May 04, 2006

SEC Cuts Fees -- Will It Matter?

Yesterday, the SEC gleefully issued a press release entitled, “SEC Announces Billion Dollar Fee Cut to Benefit Investors.” Well happy day!  But will it matter?

I got my hopes up on this one, anticipating something that would cause commissions to drop even further. After all, the SEC clearly said that they didn’t want the brokers to pocket these cuts in fees.  The cuts happened to benefit investors!  It’s right there in the title!

With the help of several of my contacts in the online brokerage industry, I learned that the fees in question are currently quite small, and just get eaten by most brokers.  One of the fees, called a Section 31 fee, is charged to the seller of a security (stock or option) at the rate of $30.70 per million dollars.  So if you went out tomorrow and unloaded $100,000 of stock, the SEC Section 31 fee would amount to $3.07.  In October, that fee will drop to $15.30 per million, or $1.53 for our hypothetical $100,000. 

Whoopee.

The other piece of the fee cut involves registration fees for new issues and other actions related to IPOs (Section 6(b), Section 13(e) and Section 14(g)), which is dropping from $107.00 per million dollars in sales to $30.70.  That may affect new offerings, but it’s unclear how much it will cut costs. 

I’m disappointed by the headline the SEC used to trumpet these fee cuts.  My first reaction was, “Hey, there’s got to be a great story here!” But after a little digging around, and a very informative phone call from Tom Sosnoff of thinkorswim—Thanks, Tom!—I learned that there’s not much of a story. 

Saturday, April 22, 2006

Brilliant! Send This to EVERYONE You Know!

Don’t those emails that start off, “This is completely true!  Send it to everyone you know!” irritate you?  I find them a colossal waste of time.

So imagine my delight when I came across this delicious post from the Personal Tech Pipeline.  It starts:

“I’m repeatedly amazed that I still get e-mail hoaxes, always sent earnestly by relatives who have been suckered in. Give-away hoaxes ("Bill Gates"), sympathy hoaxes ("Little Girl Dying of Leukemia"), warning hoaxes ("Stay Out of the Mall on Halloween!"), chain letters ("Hawaiian Good Luck Totem"), urban myth e-mails ("Flesh Eating Bananas")—I’m sure you’ve gotten your share.”

The author, Mike Elgan, encourages readers to end email hoaxes by participating in one themselves.  He says, “I received yet another e-mail hoax yesterday, and thought: There has to be some way to educate the public. Millions have been educated about hoax e-mails—you almost never see technical people, for example, passing these around. The victims tend to be less computer savvy.

“So how do you reach these people?

“Then it hit me: E-mail chain letters! Why not write an ‘e-mail hoax to end all e-mail hoaxes’?”

I encourage you to read his entire article by clicking here:  Email Hoax to End All Email Hoaxes. 

Send this to everyone you know!!