Software Does Everything but Assure a Profit
When the big traders play the stock market, they use powerful computers, expensive custom-written analytical software and instantaneous communications to manipulate millions of dollars in transactions.
You don’t have to be a big trader, however, to have some very sophisticated tools at your disposal. All it takes is a personal computer, a few software programs, a communications link and subscriptions to stock market data services. There’s no guarantee that you’ll turn a profit, but that’s something else you’ll have in common with the big boys.
Before you can decide what to buy or sell, you have to know what the prices are. One of the fastest, easiest ways to do that is with Lotus Signal, a small, special-purpose radio receiver that allows your computer to monitor trading on more than 20,000 issues direct from the floors of the major securities and commodities exchanges.
The data is relayed by satellite to FM stations in 12 major cities--including Los Angeles, San Francisco, Chicago, New York and Washington--which then broadcast the data on the otherwise unused portion of their normal radio signal.
The textbook-sized receiver contains computer chips that allow you to select particular investments to track. Lotus Signal beeps when an investment’s price moves above or below set limits, and it alerts you when news breaks about one of these investments.
Latest prices, trading volume and daily highs and lows for each security, index or commodity you select always are available. The receiver stores the continuously updated information when you’re not using Lotus Signal.
Reading the data couldn’t be easier. The information is displayed in column form in whatever order you choose. Lotus Signal data can be transferred into a Lotus 1-2-3 or Symphony work sheet to do financial calculations, and sample work sheets are included to get you started.
The greatest limitation of Lotus Signal is that it provides only current data. If you leave town for a week and don’t update your spreadsheets, you will have lost the information for that period.
Lotus Signal sells for $595, but that’s just for the receiver and the software to connect it with your computer.
You also have to pay for a data service. The basic subscription is $100 a month for a single stock exchange, plus $20 for each additional exchange. The exchanges also impose monthly fees for the right to see their transactions almost immediately, without the standard 15-minute delay. Those fees range from a low of $5 for the American Stock Exchange to $50 for the Chicago Board of Trade, assuming you are not a broker.
Another tool for investors is special stock market software. It helps investors keep track of their portfolios and analyze individual stocks (fundamental analysis) and broad market trends (technical analysis).
While much of this can be done using a combination of spreadsheet, graphing, database and telecommunications programs, it is much easier to use a single program designed for all of these tasks. One such program is Dow Jones Market Analyzer Plus, which is designed for receiving stock market data by telephone modem through the Dow Jones News/Retrieval service. The news retrieval system has the advantage of supplying both current and historical information.
The $449-Market Analyzer Plus lets you automatically access the Dow Jones News/Retrieval service to get updated data on the stocks you’re tracking. You are alerted to news stories about those stocks as well.
You can chart the movement of each stock five different ways using various sophisticated analytical approaches, and it also allows you to plug in your own formulas.
The portfolio management portion of the program will show, among other things, current profits and losses, return on investment and the actual performance of securities versus what your investment adviser led you to expect.
You must pay for the data you receive from Dow Jones. The fee schedule is too complex to describe here, but there are enough options to meet the requirements of small and large traders. With its automated data-acquisition, the Market Analyzer Plus program will minimize the time you are connected to the database and thus cut costs.
Another program, Market Manager Plus, lacks the analytical features of Market Analyzer but has more extensive portfolio management features, including the ability to track up to 256 portfolios, compared to 45 for Market Analyzer.
And unlike Market Analyzer, which is available only for IBM and compatible PCs, Market Manager comes in versions for the Macintosh ($299) and Apple II personal computers ($249). Both programs can be gotten through Dow Jones & Co. at P.O. Box 300, Princeton, N.J. 08543; (800) 257-5114 or (609) 520-4641.
The ability to place buy and sell orders directly from your computer is a feature of the Equalizer, offered for $199 by Charles Schwab & Co., the discount brokerage firm, 101 Montgomery St., San Francisco, Calif. 94104; (800) 334-4455. It also provides access to the full Dow Jones News/Retrieval database plus Standard & Poor’s Marketscope, which lets you read what analysts are writing about stocks. You pay the standard fees charged by those services.
Schwab’s Equalizer gives you complete portfolio management with automatic updating on all securities bought through Schwab. The program can produce portfolio or individual stock reports for gains and losses, year-to-date transaction summaries and dividends, interest and cash summaries.
Be sure to buy the just-released version 1.5 of the program, which is fully compatible with MS-DOS, the operating system for IBM personal computers and their clones. It also allows you to make full use of hard disks. If you already own an earlier version, you can get the updated one for $29.95 from Schwab.
One of the best-known sources of published information for stock analysis is Value Line. You can get a shortened version of these reports on computer disk with Value Screen Plus. (The reports include 37 recent performance gauges, including measures such as price-to-earnings ratios, for each stock, but they lack the historical data and analytical comments of the printed Value Line reports.) Annual subscriptions that provide monthly updates cost $348, while those providing quarterly updates are $211. There are also disks for Apple II, Macintosh and IBM PC and compatible computers.
The beauty of Value Screen Plus is that it will search its 1,600-stock database to show you only those securities that match the criteria you specify. Contact Value Line Inc., 711 Third Ave., New York, N.Y. 10017; (212) 687-3965.
FOR THE RECORD:
Monogram Software, publisher of Dollars and Sense, which I reviewed in my Aug. 3 column, says the latest version of its software is not copy-protected and can easily be copied into any hard disk subdirectory. Those features were portrayed inaccurately in the review.
Computer File welcomes readers’ comments but regrets that the author cannot respond individually to letters. Write to Richard O’Reilly, Computer File, Los Angeles Times, Times Mirror Square, Los Angeles, Calif. 90053.
