[LobsterSan]

Are there any investors on this board? My mother recently went to this convention of sorts that was like a big infomercial for this stock market trend software. She wants me to go along and have a look and see what I think about it. The software is not cheap, ringing in at about $3000. I am *incredibly* skeptical about this. I am just curious if anyone has had experience or knows if this sort of thing is legitimate or not. She wants to learn how to invest her money safely and start up a nice retirement fund, and what with the stock market crash she ended up having a hard time with it. I am just worried that she is looking in the wrong direction.

So please, someone tell me that these software packages are not a complete scam. Please only respond to this if you have something constructive to say, as I am already highly suspicious and I don't need any negative comments about my mother being presented.

 

[aeberbach]

These things usually work by analyzing trends. If software can pick a cycle that goes up, down, up, down etc., it may be able to tell you when the next peak or trough will actually be. Similar idea have been used for horse racing software. However so can Excel if you are diligent about putting the figures in yourself.

This is a really doubtful source, but I think it was in some Tom Clancy book I read that automated trading programs were largely responsible for the big dive of 1987 or was it 1988? Since then there is some regulation on their use by floor traders. As I said, doubtful source, hope someone can provide more information about that.

 

[ManiacSmile]

It's a grey area actually and from my personal experience (I'm a futures trader) 9 out of 10 software packages of that sort are based on the data matching. The black boxes that you were referring to, they exist, howere not all of them work constantly due to the fact that the market is always changing . For instance almost 40% of the volume on E-mini futures is generated by robots and these robots, also called "neural networks" are much more expensive to aquire (usually you can't buy them out) and the lease could cost you around 25000-30000$ per month. Some of those seminars will try to sell you some type of an indicator system, avaliable for the current set of charting software. Hypothetically, you'd need some understanding of the technical analysis of the stocks and futures markets to use them. That being said, I do have a system that I've been using for a while and it could be helpful to you, but I'm not really sure if you're looking for something that would require daily involvement.

 

[LobsterSan]

Thanks for the responses. I am attending the sales seminar tommorrow afternoon so I can give my mom an opinion of what I think. My guess right now, especially with what ManiacSmile said in his last line, is that it's probably one of those things that takes a lot of time in order to be successful with. And that's the kind of thing my mom probably doesn't have, since she's really busy at work (50-70 hours a week). It's at least good to know that this thing is based in some sort of a realistic investment strategy, and not just a get rich quick scheme.

I'm personally not interested in the software, but I do want to help my mother out and not have her waste thousands on something that she wouldn't use or wouldn't get benefit out of. Especially if she's going to be pouring even more money into it because it's an investment thing.

 

[ManiacSmile]

LobsterSan,

Think of it in terms of time Vs money approach, if everything were so easy, we would all be billioners. I have yet to meet at least one successful private stock investor

 

[AC1]

Quote:

Originally posted by ManiacSmile LobsterSan, Think of it in terms of time Vs money approach, if everything were so easy, we would all be billioners. I have yet to meet at least one successful private stock investor

Exactly, and if these systems worked so well, why would they need to sell the system to make money?

 

[Czilla9000]

Quote:

Originally posted by AC1 Exactly, and if these systems worked so well, why would they need to sell the system to make money?

To make more money.

 

[taoster]

It's just another tool. What you do with the information is your choice and at the end of the day it's still your decision. I personally dont see anything wrong with it but following it blindly is just silly.

 

[FalconP]

As far as I know, there is at least one hedge fund that is entirely managed by an automated computer algorithm (and hence "legit" computer investment tools do exist). The said hedge fund, which has been launched for about 3 years, has been boasting how they've "beaten the market" and made profit even when everyone was losing out. But I'd say let's wait and see -- as history tells us, any idiot can "beat the market" once in a while.

LobsterSan, if my own mother told me about that incredible $3000 investment software, I'd tell her to put the $3000 into her stock portfolio instead.

I don't think I'm qualified to advise people what to do with their money, but there are good books out there that offer sound advices to those who are concerned about their finance -- e.g. Why Smart People Make Big Money Mistakes by G. Belsky and T. Gilovich,and The Millionaire Next Door by Thomas J. Stanley, William D. Danko

 

[jim]

Quote:

Originally posted by ManiacSmile these robots, also called "neural networks" are much more expensive to aquire (usually you can't buy them out) and the lease could cost you around 25000-30000$ per month.

do you have any more info on these robotic traders? Where can I get one?

seriously though, I'd be very interested in finding out who makes this software. Thanks.

 

[ManiacSmile]

Quote:

Originally posted by jim do you have any more info on these robotic traders? Where can I get one? seriously though, I'd be very interested in finding out who makes this software. Thanks.

Well, quite a few of these systems are advertised online, the majorty is avaliable as trial versions for a "small" fee (small when compared to the regular fee). Most of them are "black boxes" and have a lot of adjustable parameters. Also if you want to build the AI by yourself, you could purchase one of the Neuro Shell software packages and create your own "brain". The problem is not in obtaining the software and paying for it - the problem is in the approach. A lot of people come into the trading business because they want to get rich and they want it fast. They want to have a bullet-proof indicator allowing them to make a lot of money, without learning all the ins and out of the business. I personally think that type of people will never be successful and destined to failure.

 

[LobsterSan]

Well, I attended the sales pitch. It was as cheesy as I had feared. But the software seems legitimate enough. It's just the pitch that comes along with it that I would rather leave on the side of the expressway, rotting with the rest of the torn-up putried carcasses.

At the very least, I think it is a tool that will start to get my mother engaged in her investing strategies and the like. The software is called Wizetrade, and they have a website which instills utter disgust in my bowels. But I think with enough practice, and with the market being as it currently is, it is possible to make some fairly intelligent decisions about investing. The way that I look at it is that my mother (and myself, for that matter) have very little in the way of experience in the stock market. This software simplifies certain aspects, and with an understanding of how it is simplifying things it can be a useful tool for long to mid-term investments. At the very least, it is making me take more interest in the way my money is invested. I mean, at least now I will take a look at how my stocks are performing more than once every 6 months, and actually do something with them instead of just accepting the fact that the market sucks and I lost a lot of money over the last couple of years by just hanging on to them for no good reason (other than I heard that's what you're supposed to do). Some investment strategy is better than having none at all. As long as you don't plan on getting rich quick, I think the program can be seen as a useful tool.

Now, the package also promises to deliver for short-term day trading. I really think this is a no-no unless you are prepared for long hours behind the computer screen, a lot of stress, and the wherewithall to accept some significant losses.

I think it is just important to wave away all the advertising and fanfare that these software products promise to deliver, and just see it as an investment tool. The $3000 that my mother ended up paying is really just some sort of a marker to tell her she needs to wake up and take control of her investments. At least that's the way I see it, and in the end it will probably be worth it (if she sticks with it).

 

[ManiacSmile]

It's a common misconception that day trading is very time-consuming, I know a few people who trade only for 1,5-2 hours a day. Yes it's stressful (especially in the beginning) but you have to learn how to live with the losses and learn how to appreciate them. The most important thing is to know when to quit, just keep in mind that you can't earn all the money that are out there

Good luck to you and your mother, let's hope this will be a successful move.

 

[antwone]

Stock market software? Computer predictions? Meaningless, ultimately, if everyone uses computers, and computers never fail, then the market will self-destruct. Computers only have the advantage when there are people to take advantage of, I say eliminate computers from market predictions altogether. The idea of predicting the market is not the point of the market anyways.

But, computers can't predict global forces like sept. 11. Thats a good thing, see, when the market crashed, people lost money, they got scared, and because of that others of us made out in the inevitable recovery.

If you use software properly it can be an asset sure, anything that provides information can be an asset. Me personally, I am the type that likes to be familiar with a company and a product before I invest. I pay attention to the larger view of the market but I don't concern myself with most of the predictions that see the market as some kind of organism. It pays off for big-time investors to play large market forces in broad swaths, but IMO thats inelegant.

My view is that familiarity with a company, with an industry, and with the market and consumers is the best way to predict the future of a companies performance. And then again, I have really good intuition, in the past year and half things have gone well for me. I guess I'm just lucky. Whatever, it matters little, the market can make you rich. Sure, there are no sure fire solutions; but patience, a little gut instinct, and good information could make you rich.

Like maniac smile said, you can't make money across the board. IMO you should pick an industry and focus on it.

 

[Gariver]

The only investment book that makes a lot of sense to me is Kenneth L. Fisher's Super Stocks. In this book, Ken Fisher emphasizes buying stocks with a low PSR (price sales ratio).

I'll explain! Company X's market value is 250mi, but its revenues (sales) are 1,000mi. So the PSR is .25! Company Y, on the other hand, has a market value of 1,000mi with revenues of 1,000mi. That gives you a PSR of 1.00. So which company would you buy? Easy! You buy company X's stock because you get one dollar of sales for 25 cents.

Of course, there is more to all this. However, the system directs to buy stocks which are cheap in relation to its sales. In due time, investors hike up the price of cheap stocks with low PSR.