Managing Your Stock Portfolio
With today's software, it's not so hard to become your own financial adviser
Several months ago, INC. ran a story about a company that seemed particularly appealing to me. I wondered if it might be worth looking into as an investment opportunity for my pension fund. But the article left out most of the financial data one needs to make a rational investment decision. Is the stock traded? At what price? How has the stock price behaved? How much is owned by insiders? Have they bought or sold their holdings? How much debt is there? Is the business a cash user or a cash generator? What is the sales and profit history? Are there any recent news stories I should know about? What about the founder's background? What source can I trust to get answers to these questions without wasting too much time or paying someone too much to do it for me? If I decide to make the purchase, which part of my portfolio can provide the cash?
My time-stamped computer printouts show that one Saturday morning, by using Dow Jones & Co.'s Market Manager Plus software and a 1,200-baud modem out of my study, I accumulated enough information to decide what to do.
Market Manager Plus isn't the only system that can help you deal with a diversified financial portfolio (see below, "Where to Call," page 2). I've chosen to use it because it is simple. The software manages my portfolio information, links my computer to the remote source, and retrieves what's necessary without much intervention on my part. (Version 2.0 is available for DOS-compatible computers and for Macintosh computers at a list price of $299. Version 1.0 for Apple IIe and IIc lists at $249.)
On that Saturday morning, after I clicked the "Call Dow Jones" tab, it connected with Dow Jones in New Jersey, automatically identified my account and gave my password, and gave me a new menu of options. My first question was whether the company that caught my interest was a quoted security, and where it was traded. The answer was yes -- I could buy it as an OTC security, and I was given its stock symbol. The bill I received a month later showed that the answer cost me $1.32.
The next step was to enter the Dow Jones Text-Search Services to scan the past year of The Wall Street Journal, Barron's, The Washington Post, Forbes, and Fortune, as well as regional business journals. The 14 news items about the company cost me $12.56. I copied the text onto my disk, then I checked the monthly stock performance over the past two years. That information cost me 88¢.
Now, I got really interested and signed onto Disclosure Online. I extracted five years of financial history (revenues, net income, earnings per share), the balance sheet for the past two years, quarterly balance sheets, financial ratios, and detailed ownership information, including institutional and insider holdings. After spending $5.28 on this inquiry, I decided I didn't need the full text of all the financial reports available through the mail. Although I could have spent more time checking other files, I had enough information. Most important, all the information retrieved from the central database was now on my disk, so that I could use it as part of a report, if I chose to do so.
I went back into Market Manager Plus to see how my portfolio was doing and to test how the new company would look as a part of it. I clicked "Automatic Pricing" to bring the valuation of my holdings up to date. Since I maintain eight different portfolios, I had to tell the computer which one was my pension fund. Two more clicks, and the computer dialed Dow Jones again and looked up closing prices for my stocks, bonds, and Treasury bills. For 44¢ all of my securities were updated, and gains and losses were computed. This feature is a real convenience, as I used to spend at least an hour every other Sunday looking up quotations and posting them into my Lotus 1-2-3. After that I would have to spend maybe another hour trying to make sense of what had happened, computing the equivalent yield after stock splits. The Market Manager Plus makes it easy to try several standard graphic displays that show comparable results for each security.
I don't have enough space to describe all the other features for tracking diverse assets, including unlisted securities, explained in the 32-page manual that comes with the Market Manager Plus (an unusually slim volume, considering the power of the program). There's no reason someone with a Macintosh couldn't begin operating the program in less than 15 minutes (for an IBM PC, double that, and maybe more). If you are still lost after the first training exercise, you can call to get competent and responsive assistance -- the essential criterion, I think, for judging the suitability of software for executive use. Since Dow Jones makes more money from its database-inquiry business than from selling software, it gives you an access allowance of one free computer hour with the purchase so that you can experiment before costs start mounting.
A program such as Market Manager Plus shouldn't be judged on its technical merits alone. It's a neatly packaged collection of utilities and services that can change the way individuals manage their portfolios. When I was a busy corporate executive, I must have had at least one offer from an investment counseling firm or from a mutual fund every day. I still use professional financial services, but I find that managing my assets is so easy, I can take on more of this job. I'm also in a better position to evaluate the results delivered by my financial advisers.
Try Market Manager Plus (or an equivalent) and experiment with becoming your own portfolio counselor. The computer software will assist you in gathering information. It will liberate you from record-keeping chores and from onerous computations so that you can apply your judgment to managing what took so much effort to accumulate.
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Paul A. Strassmann managed the computerized information systems for General Foods, Kraft, and Xerox from 1960 to 1977. From 1977 until his retirement in 1985, he was vice-president of strategic planning at Xerox. His home office is in New Canaan, Conn.
MINDING THE STOCK
Some software packages to explore
Market Manager Plus is a simple and integrated package. But it is only one of many systems that can help you manage your financial portfolio.
* The Source includes a rich set of investment-management and market data options. Similarly, CompuServe Information Service, Delphi, and Dialog Business Connection offer access to many business and financial services.
* Many software packages are available to help you manage your investment portfolio. Examples are Andrew Tobias' Managing Your Money, available both for DOS and Macintosh computers, and Sylvia Porter's Investment Manager. But before you can use them, you must also choose one of the many communications software options -- such as MicroPhone, Smartcom, or Crosstalk -- to connect your PC to a remote data source.
* If you're an avid computer user, you may want to put together your own customized group of packages. To explore the entire range of investment-management options for the individual investor, you should consult Microcomputer Resource Guide (sixth edition), published by American Association of Individual Investors, 625 North Michigan Avenue, Chicago IL 60611; (312) 280-0170. This excellent reference source, which costs $15.95, lists 141 diverse investment software packages for the Macintosh and other Apple computers, 246 for IBM-PC compatibles, 128 for other computers, as well as 80 on-line data services. Almost all of these packages are highly specialized, so you need to choose a combination of systems to get the job done.
WHERE TO CALL
How to learn more about the programs mentioned
For more information on the programs mentioned above, contact:
Market Manager Plus: Dow Jones & Co., P.O. Box 300, Princeton, NJ 08543-0300; (609) 520-4642
The Source: Source Telecomputing Corp., 1616 Anderson Road, McLean, VA 22102; (800) 336-3366; in Virginia, (703) 821-8888
CompuServe Information Service: CompuServe Inc., 5000 Arlington Centre Boulevard, Columbus, OH 43220; (800)848-8199; in Ohio, (614) 457-0802
Delphi: General Videotex Corp., 3 Blackstone Street, Cambridge, MA 02139; (800) 544-4005; in Massachusetts, (617) 491-3393
Dialog Business Connection: Dialog Information Services Inc., 3460 Hillview Avenue, Palo Alto, CA 94304; (800) 334-2564; in California, (415) 858-3785
Andrew Tobias' Managing Your Money: Meca Ventures Inc., 355 Riverside Avenue, Westport, CT 06880; (203) 226-2400
Sylvia Porter's Investment Manager: Timeworks, 444 Lake Cook Road, Deerfield, IL 60015; (312) 948-9200
MicroPhone: Software Ventures Corp., 2907 Claremont Avenue, Berkeley, CA 94705; (415) 644-3232
Smartcom: Hayes Microcomputer Products Inc., 705 Westech Drive, Norcross, GA 30092; (404) 441-1617
Crosstalk Data: Crosstalk Communications Inc., 1000 Holcomb Woods Parkway, Suite 104, Roswell, GA 30076; (404) 998-3998