Stock websites offer benefits of collective wisdom
News from globeandmail.com
Saturday, November 3, 2007
Stock websites offer benefits of collective wisdom
The Internet-driven empowerment of investors has entered a new phase.
Let's call it co-operative investing and define it as investors offering up their own thoughts, ideas and stock picks and in return benefiting from the wisdom of others. This sort of online dialogue has existed for a while through Web-based discussion forums and blogs. Now, it's being broadened and refined in ways that help investors get good information and avoid the hot air and bluster that pollute cyberspace.
Three websites that exemplify that co-operative investing are part of the Portfolio Strategy column's latest roundup of useful online resources you should know about. A site with appeal to investors interested in global markets is included as well, as are sites that can help you track historical share prices. With the sale of BCE Inc. looming early next year, a lot of people will have to try to figure out how much they paid for their shares years ago.
A fixture on the Canadian online investing scene, the website Stockhouse.ca has set about relaunching itself in a way that exemplifies the co-operative investing theme. Stockhouse has long been a sort of investing vox populi through its BullBoards feature, which is an online discussion forum, and more recently through its directory of blogs maintained by site members. The newly rejigged Stockhouse builds on these features by helping users find the most useful content.
From its earliest days, the Internet has provided a means for investors to discuss their ideas and compare notes. But if you've used any of the major online investing discussion sites, you'll know that it's a bit like mining in that you have to churn up a lot of ground to locate a useful chunk of information.
One way to get an idea of what investors are saying about a particular stock is to use a directory called TheLion.com, which aggregates postings to all the major U.S. financial discussion forums. If you'd checked out the buzz on General Electric this week, you would have found a mix of intelligent debate about the impact of the low U.S. dollar on the company and an overheated digression about Iran, the United States and Israel.
Online discussions on any topic have a way of attracting people with nothing much to say but a burning need to be heard. Helping you avoid their musings and ranting is what Stockhouse is trying to do.
The new site is just coming out of its test stage, so it's not yet possible to say how effective it is at highlighting the smartest, most useful blogs and BullBoard postings. But you can see how Stockhouse is trying to maintain some quality control. BullBoard postings can be rated according to their clarity, credibility, usefulness and overall quality, while blogs can be evaluated according to the number of people who have listed them as favourites and offered up comments.
Stockhouse has also created a unique homepage with a graphic showing which stocks are the most actively discussed on the site. On any given day, most of the hot topics are stocks listed on the TSX Venture Exchange.
For another view on co-operative investing, check out a pair of U.S. sites called Covestor and Marketocracy. Both are based on the idea of having users disclose their own stock trades so they can be tracked by the community. They offer recognition to the gifted investing amateurs out there, while everyone else benefits from the ability to see what they're up to.
Both sites are not set up to allow users to anonymously soak up the best investing ideas without contributing anything back. The point is to get you to strut your stuff and then benefit from looking on as others do the same.
Covestor calls itself a "real-trade sharing service," which in practical terms means you'll set up a portfolio of stocks and allow the returns to be monitored in a way that measures them in a professional sort of way using recognized benchmarks. Covestor actually vets aspiring members by requiring a copy of their account statement (you send it through a secure link). Only if you're accepted into the community do you get to set up a username and password that lets you into the site.
Once you're in and have your own portfolio online, you can view the holdings of top-performing portfolios and look at their returns against a variety of stock indexes. You can also view the most widely held and best-performing stocks in Covestor portfolios.
Marketocracy is set up almost like a farm system for a family of mutual funds run under the same name. If the returns from the portfolio you maintain on the site are stellar, they get included in the site's m100 index, which is an aggregate of the top 100 portfolios on the site. The m100 index is in turn used to help run the Marketocracy Masters 100 mutual fund, which is available to U.S. investors and has outperformed the S&P 500 over the past five years.
Marketocracy claims to have recruited 55,000 people to manage virtual accounts, but you can't get detailed information on the stocks they're trading unless you pay for the premium service at $180 (U.S.) a year.
Covestor and Marketocracy are great generators of investing ideas in the U.S. market. For global markets, try Site-by-Site, which describes itself as an international investment portal and research centre. Site-By-Site has been around since the early days of the Internet, and looks its age. But with interest in global investing on the rise, it's a website whose time has come.
Pick a country and then use Site-By-Site to find links to its stock exchange, its central bank and sources of information on business and economic news, facts and figures. Whether you're interested in the Indian stock market or the latest on the Riga Stock Exchange in Latvia, this website will get you what you need a lot faster than playing around with the usual Internet search engines.
Site-By-Site is also useful if you're on prowl for foreign companies that you can by as American depositary receipts, which are basically a special class of shares issued on a U.S. exchange by a company located in another country. It also links you to good sources of data on closed-end funds, which are basically mutual funds that trade like stocks.
The takeover of BCE won't be completed until next year, but it's already highlighting the need investors periodically have to look up historical share prices for tax reasons. If you want to know how much of a capital gain or loss to report, you need to know your purchase price.
A new generation of online stock charts has greatly simplified the process of looking up historical stock prices. Just create a price chart for a stock you're interested in, ease your cursor along the line showing price movements and watch a pop-up box display the day-by-day open, high, low and closing prices.
Let's say you bought some BCE shares five years ago and need to obtain the purchase price. Just go to Globeinvestor.com, call up a quote for BCE and then click on the "chart" link. Click again where it says "interactive chart" in the upper left corner of the screen, and then adjust the time frame for your chart to five years. If you move your cursor to the far left of the chart, you'll find that BCE shares closed at $27.24 for the trading week ending Friday, Nov. 1.
Yahoo Finance offers interactive stock charts as well, as does Google Finance. If you need a historical price on a particular day, go to the historical charts section of BigCharts.com. For Canadian stocks, type CA: in front of the symbol, as in CA:T.