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I am sure that was Enron's excuse as well. The computers just could not count as high as we needed them to, so we just manually adjusted it.
<<New photos up>>
At my first glance at reading that, I misread it as though there was a "d" at the end of "new." Come to think of it, that may have some cobranding marketing potential for you. You ought to give Hef a call.
<<Hope you're having a great holiday hotdog!!!!!!!!!!>>
Your secret is out -- your pet name for Matt: "Hotdog." Should we ask why?
<<The only thing I will say is that I think your volume for 5/23 is incorrect. If I am not mistaken it was something like 19 billion.>>
My volume numbers came from: http://bigcharts.marketwatch.com/historical/.
I should have included that in the post. I have no idea what the true volume numbers were.
<<Generally, the short position had to be covered in the market place. If that happens here GVRP will go to the moon.>>
The practical problem with that in this case, which is what takes it outside of the general situation, is that is it impossible to cover the presplit share sales in the market place. There are not enough shares to do it -- period.
Shorting notwithstanding, a company cannot have more outstanding shares than it has shares. Thus, the general requirement for short sales to have shares available to borrow.
Let's try this a different way. I think all agree that the 11 preexisting shares became 33 million post slit shares. Someone can only sell you what they own. If they do not own it, they cannot legally sell it to you -- at least not as against a claim of those who do lawfully own it. The people or brokers who sold restricted post split shares into the presplit market had no legal right to do so and the buyers acquired no more than the sellers had a right to sell -- regardless of what they thought when they bought.
As to the buyers, however, their claim is going to be "I don't care what the seller really owned, he sold them to me and I am entitled to the benefit of my bargain." Lots of contract issues come into play. The first, and probably the most applicable, is mutual mistake of fact, which is both a cause of action for rescinding the contract and a defense to a cause of action for damages based on the expected benefit of the bargain. The legal remedy for mutual mistake of fact is recision, which puts each side back to the position they were in before the mutual mistake. No gain, no loss on either side.
Of course, there may also be statutory violations from the illegal sale of restricted stock. The causes of action and remedies for this are beyond my knowledge and I would not even hazard a guess.
Thinking out loud about this, the company and people within it obviously recognized the problem long before the actual suspension of trading. How might they have known and discovered the problem? First, they may have seen the trading volume, but that does not explain all of the contents of their press release. It went beyond just seeing the trading volume even if that was the genesis for their discovery. More likely, whoever had the account the 3 million post split shares were put into before they should have been or without restriction, noticed large sums of money suddenly coming into their account. If all that was sold was stock from this account, then there are no short sales, naked or otherwise. Of course, this also means that that account has some rather large cash balances from the sales: a fund with which to make people whole.
It is almost certain, however, that some of the transactions, later in the week especially, were sales by folks who had bought at lower prices. It is likely that there are quite a few folks out there sitting on cash profits or cash + essentially free remaining stock. Of course, if those people did not truly own unrestricted stock, regardless of what they thought, then they could not sell it either. This explains some brokerages freezing sales' proceeds from non insiders.
Ultimately, if all presplit transactions are not reversed, there may be a few folks who end up getting to pocket their gains while others who are in a loss or potential loss position get paid off for their loss (as opposed to their expected gain) either from insurance or the cash sitting in the account where the original, improper sales had their genesis.
For those who don't like the results, they have a business decision to make about the amount involved versus the expense of pursuing it.
It is also possible that there was conscious intent to try and illegally make money from selling post split shares as though they were presplit shares. If there were nefarious motives involved, and I am not suggesting there were, but rather just discussing various theoretical scenarios, then the money may gone, one or more people may be ultimately headed to jail, and folks may lose money unless their is insurance coverage (SIPC or otherwise) to make good on the losses.
Since much of this is playing "what if," I, like everyone else, reserve the right to be completely wrong. There could be lots of things that went out that none of us have even yet imagined. One final caveat: no one should act, fail to act, or rely in whatever decisions they may make, on anything I have said. This is not legal advice and is just a collection of my musings. It is speculation -- no more.
I may be missing something on this, but it sure seems like the brokers who were selling the pre-split shares were effectively shorting naked since they did not have the shares to sell and could not have borrowed them. The mistake originated either with a human error regarding the outstanding shares from either the company delivering shares without the required restriction or brokerage firms ignoring the restriction and thinking restricted shares were not restricted. There was clearly not a realization that there were only 11 outstanding shares and that the 33 million post split shares were not restricted pre split.
Regardless of how many outstanding shares there really were or are, if there were delivered shares with proper restrictions, then the brokers who sold the pre split shares had and will have the obligation to buy to cover, which may also explain the post split runup. There are and were not enough real post split shares available for them to buy to cover everything they had sold naked pre split.
I suspect that the ultimate resolution of this may be that one or more brokers go out of business and-or instead of paying off in shares, they end up paying off cash for the value of what they sold but could not deliver. The value of what they sold but could not deliver, however, may be limited to the price they were sold for. If this triggered SIPC coverage, then SIPC would almost certainly pay off for the loss rather than the loss of a gain occasioned by the error. That is, folks who still hold shares may get paid what they paid for them but no more. Those who sold their stock for a profit wil get nothing.
There was some substantial trading of this on 5-17 to 5-20 inclusive.
5-17 34,900 2.90 to 4.75
5-18 134,600 1.25 to 4.00
5-19 62,400 1.50 to 2.20
5-20 259,200 1.80 to 10.55
Total 491,100 1.25 to 10.55
5-23 2,229,790,000
5-24 556,408,000
5-25 799,834,000
5-26 1,362,500,000
Total 4,948,532,000
Why is Newport no longer available (aside from the mere fact that they are not selling it)?
Is possible to still get a copy from somewhere/someone (I am happy to pay the license fee) or are there operational problems with newer operating systems?
There must have been a glitch somewhere, cuz I am back down to about a third of that -- around where it normally is.
I did not think I had that much capacity on roadrunner.
From PC Pitstop:
Download speed: 9437 kilobits per second
Test details: 3354 kilobytes downloaded in 2.39 seconds.
I got "infinity" on the McAfee site after a few in the 9.7+ MBps range
That must really blow....
Let's see if I understand this correctly -- it "works" for you and you are glad things got straightened out. That could be a HUGE event and you really might be every man's dream.
I understand that their window trades program may not fit everyone's trading needs or styles, which, I suppose, is also why there are so many different brokerage houses floating around with many catering to niche segments.
I had not closely looked at the 4600 stocks included in the window group, but suspected that many small companies (particularly BB and pink sheet stocks) were likely not on the list. Your review in that regard certainly does not surprise me.
That said, Folio-fn also functions as a regular brokerage house. The difference between the $299 and the $399 level, aside from the extra window trades, is 10 regular trades (market, limit, etc.) a month, which works out to about $3.33 each over the course of a year. Additional regular trades are $3.95. Thus, even aside from and not considering the fractional and dollar amount features of the windows trades, the price for regular trading services looks appealing -- assuming that someone does enough trades monthly to justify the flat expense. By the same token, I also understand that for 100-200 trades a year, the $1 difference is probably not worth the hassle of moving an account: that threshold will be different for everyone. For someone for whom the window trades and the diversification it offers is the primary appeal, the regular trades are simply a bonus.
To get the 10 free monthly regular trades, one must bump from the $299 to the $399 level, of course. The $100 difference there is worth it to me for the 10 free trades a month -- 120 a year, especially if I get into active AIMing a variety of stocks. It basically takes commissions out of the equation in trading.
Thanks for the review and input. The more perspectives I get on this (and I was very happy to have found a couple of people who use them and are satisfied -- no complaints from anyone so far, which is also unusual), the more confidence I have in making an informed decision.
I am about 90 percent certain that I am going to give them a shot and see how it works out.
I have not grubbed in a long time, but have had a little success at it.
#msg-900000
#msg-1500000
Check all the biggies out here.
#board-1594
Thanks for the info.
I read on their site that they maintain detailed CG records that are downloadable, which is an attractive function to me -- especially being able to manually configure lots for sales. If I can drop it into the Quicken, it makes the accountant a lot happier.
Based on what you wrote, I suspect not, but have you seen this element of their service?
I agree that it would be very nice for the 401k, but even though I am the trustee for our 401k, we are locked into a long term agreement elsewhere -- so, for now, it is not a possibility. Besides, even though it might be nice for me, it would probably not pass the prudence test for most other folks in our plan -- they are not a very financially savvy lot. Even choosing mutual funds, quantity and quality, is a daunting task for most of them.
It does look better -- even though the Java feature would be even better and have far more function.
Just create a back door so that password changes won't affect you.
I don't think that beta by itself will lead me to AIMable stock choices. I know far better than to think that any one thing will. But, that said, it is a factor, in volatility it seems, which is a factor, though admittedly not the only one or even the most significant one.
If it is a factor, as it seems it is, I simply want to fully and accurately understand it and be able to compare apples to apples.
Okay, since you asked and want to go there, let's take the statements from your original post that I quoted and suggested were inaccurate, as well as the ones I did not mention, and take them apart piece by piece. You said:
<<Foliofn is charging $39.95 a month plus, $3.95 a trade, plus all the other minimums requirements [sic] people neglect to address when they post new “lower” rates advertised by another on-line firm. However Foliofn is charging nearly $500.00 a year on it's monthly plus the $3.95 a trade which will be well over a $1000 is [sic] you are a [sic] active trader.>>
1. Folio FN is not charging "39.95 a month plus." There is no "plus" on the base fee. At worst, the $39.95 (or less, not more or plus), includes 10 free trades, which with some simple math sure seems like ~$4 a trade for those 10 trades. For someone who does not churn their accounts or trade heavily, this sure seems like a pretty reasonable deal especially considering the other feature discussed below.
2. You conveniently ignored that it is available for as little as $199 a year, although that admittedly results in far larger commissions for even a semi-active trader. You also omitted that the annual rate for the $39.95 a month plan is only $399 a year, not $500 a year as you suggested.
3. You also spun your point in a misleading way by quoting only the highest possible base fee, an amount that is easily lowered by 20 percent or more.
4. You left out of your conclusory analysis that the $39.95 or less base price also includes 600 free window trades a month. For many folks who have no need to hit a precise price to the penny at a precise moment and for whom a few cents one way or the other makes no difference, this would be extremely beneficial and far exceeds anything else that appears to be available from anyone else. Even if someone wants to hit a precise number, they can do so at the window trade times and have programmable control over the limits within which they will accept adverse movement. As an aside, although not directly relevant to the point, do you think that MS would really be happy with you or anyone else processing 600 trades a month, 7200 trades a year, of fractional shares or would do so in dollar amount increments rather than in non 100 share increments for its $250 a quarter? Anything is possible, but, in my opinion, I seriously doubt it. I do suspect, though I have not looked and could be wrong, that one of MS's hidden requirements is a minimum trade size of at least 100 shares to qualify for their flat fee and that trades of less than that amount may incur additional fees. Edit -- I went and looked at your MS comparison and will discuss it below.
5. The $39.95 or less, not plus, a month is not "plus 3.95 a trade." The $3.95 a trade only kicks in after 10 trades for the $39.95. An accurate statement would have been $4 or less for every trade not "39.95 a month plus, plus $3.95 a trade...."
6. There is no factual basis for your statement "plus all the other minimums requirements people neglect to address when they post new “lower” rates advertised by another on-line firm," at least to the extent that you implied, which seemed to be the purpose, that there were any such "other minimum requirements" associated with Foliofn. Were you aware of any "other minimum requirements" or were you just interested in trashing potential competition, or a company with which you were really not familiar enough to be making factual statements, without a true factual basis for doing so? Trying to find some now, although I don't think there are any, when you were not aware of any before would just make my point.
7. You apparently spent little to no time looking any further than Folio-fn's rate page (and, it seems, incompletely at that) to reach your conclusions about Folio-fn's value, from a cost perspective, to people who want to own stocks. There is far more to the trading universe than day traders. Let me start by conceding that for someone who plops down $50K and who only trades (or wants to trade) in 100 share or greater increments and who trades one or more times each day, 50 weeks a year, the $1K a year flat fee of MS may be a better deal than Folio-fn (but, see below) -- especially considering the service and research available (although some would, and many have over the last few years, questioned the value of big brokerage firms' research, but that is not really the point and I know nothing about MS's research and do not mean to imply it is anything but first class). For an equivalent $1K, and considering only regular market orders and not any of the other features or benefits of Folio-fn, which you did not consider anyway, the break even point between Folio-fn and MS is around 250 trades a year. Thus, in that situation your analysis had some facial appealability, but again see below. But, for anyone who trades less than that 250 times a year or who does not "put 50 large" down, Folio-fn is superior on a pure cost of trade basis. By the same token, Folio-fn may also be a far better deal than most other non flat fee brokerage houses out there. Do you really think that all other things being equal, it is better to pay $5 or $10 or more dollars per trade when you can pay $4 per trade? I doubt it. In this connection, you were not asked initially to compare Folio-fn only to MS or to even rate it for active day traders. Indeed, although you made the comparison, the post to which you were replying initially conceded that "Foliofn is geared more to the SS crowd than day traders." Given the premise from which the inquiry originated, one wonders why you trashed it for the purpose for which it was already conceded that it might not be the best. Your comments and analysis completely ignored the groups to which is might be beneficial -- even though they were spelled out in the post to which you replied, and instead chose to focus, and inaccurately at that, on their quality, which you had and have no factual basis to question. I doubt you would be very thrilled with someone questioning the quality of OC's business to be without knowing anything factual about it, much less someone assuming that it was trash simply because of the fee structure.
8. More importantly, I suspect (that means I am making a calculated though not fully educated guess), and think I am fairly safe in doing so, that the majority of people who own stocks do not plop down $50K, do not trade once a day or more, and would love the ability to diversify by being able to trade small lots of less than 100 shares or make dollar denominated investments, without being killed on commissions from a percentage standpoint. In fact, I would hazard to guess that this group of consumers probably far exceeds in quantity, perhaps even by a large multiple, if not 10 or more, the size of the 250+ trades a year group or the group who will or can plop down $50K. I realize that may not be your ideal target audience, but that is no reason, much less a rational or factually based one, to trash another brokerage firm's cost, fee structure, and services or to suggest that their services are somehow substandard or that real costs are hidden -- again statements and implications for which you had and have no factual basis.
9. In fact, I would suspect that a very large amount of the consumer trading universe, and probably the IHUB universe as well, executes no more than 10 trades a month. Of course, it appears that in your zeal to out-of-hand dismiss Folio-fn as irrelevant to active traders, which itself was not necessarily accurate (again, see below), you failed to take a look at anything more than price. For example, for someone who wants to start with say $10,000 and invest in multiple stocks (perhaps 50-100) and wants the ability to add a few hundred each month or split it up into purchases several times a month in dollar denominated investments rather than 100 share lots, Folio-fn appears to be a far better deal than the alleged $1K a year flat fee at MS or the fee structure at any other brokerage house with which I am familiar.
10. Please pay particular attention to this part. I have no qualms with an expression of opinion, everyone is entitled to theirs, and I know that like noses, everyone has one. I do have qualms with expressions of fact that are inaccurate either because they are expressed without any meaningful investigation into the facts or because they intentionally choose to ignore the real facts in order to make a point beneficial to some other point they wanted to make. I am willing to presume that the former applies in this case or that you were simply expressing an uniformed opinion -- you just should not have represented it as fact.
11. In that same context, I have a question for you. Given your method of cost comparison of MS to Folio-fn, would it be fair for folks to also assume, if not expect, that OC's cost structure will, if someone plops down $50K or more, allow them unlimited annual trading for $1K -- or less considering that OC will likely not have "the best research of one of the best wire houses" and may not have "[y]our own broker to call and bitch at when you need some paperwork for your accountant or if he/she gives you a bad idea or limit." If so, then I have no further point to make. If not, then there sure seems to be yet more reasons to question the validity of your comments regarding Folio-fn.
12. Since you mentioned the rest of your original post as an example of your completely accurate factual statements and assessments, and even though I had not questioned its factual accuracy before, I will do so now. Thanks for the link to it. First, let's start with your statement, "And for $1000 a year or $250 a quarter I trade stocks and options absolutely free." That is not quite true, at least based on their fee structure as set out on their web site. http://www.morganstanleyindividual.com/accountoptions/choice/fees/ Someone who plops down $50K and invests it in equities, appears to pay $1125 a year, not $1000. I will grant you that it is not a huge difference, but it may be to the person paying it -- especially if they are running (or making) cost comparisons with another brokerage firm (like MS to Folio-fn). The difference gets larger if someone has say $75K instead of $50K -- that person will pay $1687.50 a year, not $1K: the difference is getting greater. For equities, the amount they pay of the first $250K is 2.25% of the amount in the account, not a flat $1K a year. Thus, the person with $250K would pay $5625 a year, not $1K -- a HUGE difference. Second, and amazingly, MS also appears to charge .5% for keeping a portion of that $50K or more in cash. I am not aware of many places that charge for holding cash -- and Folio-fn sure does not. Most places don't charge fees for keeping cash balances or sweeping excess cash into a money market account. Third, you omitted to mention a significant restriction on the Choice account: "Morgan Stanley Choice is not for day trading or other extreme trading activity, including excessive options trading or trading in mutual funds based on market timing." So much for your suggestion that the MS account would be better than Folio-fn for day traders. That also pretty much makes most of your other comparisons suspect, if not equally inaccurate. Fourth, your post stated "Your own broker to call and bitch at ... if he/she gives you a bad idea or limit." MS sure seems to view this account a bit differently since they expressly state that the Choice Account "is not an investment advisory account; any investment advice is solely incidental to Morgan Stanley's business as a broker-dealer." I guess you can literally bitch all you want, but that was not the suggestion or implication of your point. I would bet that I would find more things if I took the time to read the Client Services Agreement. Four inaccurate things is enough for this purpose -- especially given the nature of them.
12. There were other problems with your comments but this is more than sufficient to make the point. I sure hope your stock selection research and the way you will run your business are more thorough, complete, and accurate than the research you did before commenting on Folio-fn and representing what was available from MS.
I stick by my initial, and in hindsight rather kind and tame, assessment of your remarks regarding Folio-fn.
Tom (and-or anyone else who wants to jump into this):
I don't mean to overly complicate this, even though I am probably doing it, but it sure seems that if betas are a significant and-or meaningful tool in effective AIM stock selection that it is important to know exactly what it is measuring and how -- otherwise the inclusion of stocks with it as a given level may end up being no more than coincidentally rather than causally related to anything meaningful.
Let me start this missive by noting that I read at several sources today, and this is consistent with VL's general statement of a long term look, that commercial and professional sources typically measure beta over a five year span -- assuming it is available.
If the beta is measured above one as same direction but more so the higher the number gets and under one (as a negative reflection relative to the index used) as opposite direction and more so the lower (further below one and closer to zero) the number gets, then the .16 beta that a couple of sources had for APOL makes perfect sense since that would indicate a large move opposite the direction of the market over the five year time span. Such a scale, without using negative numbers, however could only measure within a band of one each direction since that is all that is available on the downside. This, however is inconsistent with VL's statement that a 1.25 means a 25% greater move. This reasoning would result in 100% greater movement at a beta of two, a 200% greater movement at a beta of 3, and so on. The problem is that there is no such way to measure an inverse movement beyond zero on the same scale. Stated differently, how would one measure a 200% inverse relationship? Thus, an inconsistency and dilemma I have no way of resolving, or more appropriately cannot understand how to resolve, from a conceptual point of view.
The long post with links I posted earlier contained a number of links to sources pointing out that beta bears no meaningful relationship to the likelihood of making money on a given stock and that any anecdotal relationships are most likely coincidence. Given the five year period over which it is measured may partly explain this. No other tool used for evaluation expects that what a company's stock price did over the last five years will translate into what it is likely to do in the future. The most obvious reason for this is that it tells us nothing about the trend of the beta or what it has done most recently, both of which are likely more meaningful indicators of near term stock price movement. For example, measured over a 5 year span a stock could have a beta of 1.5, but also have a trailing 3 month, 6 month, and-or 12 month beta that was any other number -- 1.4, 1.3, 1.2, 1.1, 1.0, 0.9, 0.8, etc.; betas that would be a more accurate measurement of more recent trends and activities and thus could significantly influence judgment in the "what have you done for me lately" analysis. This would also seem to be a particularly appropriate consideration for AIM selection since a more recent beta of 1.0, despite a long term beta of say 1.5 could indicate a stock with slowing movement relative to the market that was far less desirable than one with a long term beta closer to one, but a shorter term beta and trend greater than and away from one.
Of course, that does not explain the .75 beta from Value line, which relatively speaking would be equivalent to a 1.25 on the positive correlation side, unless the method of doing it weekly with averages somehow significantly distorts the longer term picture. By this I mean that it could be that on a relative weekly basis, APOL only moved 25% inversely to the index, even though over time that resulted in a 500%-600% real inverse relationship of the relative levels of the stock price and the index. Mathematically, I am not sure that is possible, but I have not taken the time to manually figure it out. I suspect that it is not possible since I bet that we could all easily find 1.25 beta stocks that are not 500-600% greater and in the same direction as the index over the last five years -- even though some may coincidentally be so.
It looks like I need to do some more reading as well as seeing if there is a source for more recent betas or beta trends or a fairly easy way to import the data and self-calculate it. As always, if what I have said makes no sense or seems flawed, I sure want to hear about and understand why.
Maybe I don't understand beta like I thought I did.
How can a stock whose price has appreciated ~500% over 5 years while the market (S&P500) has lost money over the same time span have a beta of less than 1?
You might want to consider updating this as well:
http://www.investorshub.com/boards/faq_moderator.asp
Investors Hub Moderator’s Handbook (updated June 10, 2003)
I suspect that there are some things in it that might just no longer be accurate. For example:
Question: Can I ban someone or remove a post without a reason?
Answer: No. Every post removed must meet the criteria you selected. The only way for a person to be banned from a single board or from the site is through Matt.
We do not currently allow banning of people, though. That is to be handled by me, if it needs to be done. I allow your own thread rules to an extent. If you are pushing the limit, I’ll let you know. Don’t try anything crazy.
Finally found someone who uses them:
#msg-6455881
Some stuff I culled to try and better understand it myself.
http://www.travismorien.com/FAQ/portfolios/mptcriticism.htm
http://www.sherlockinvesting.com/articles/capm.htm
http://traders.com/Documentation/RESource_docs/Glossary/glossary.html
Beta A regression of the estimated coefficient that belongs to a particular variable.
Beta (Coefficient) A measure of the market/nondiversifiable risk associated with any given security in the market. A ratio of an individual's stock historical returns to the historical returns of the stock market. If a stock increased in value by 12% while the market increased by 10%, the stock's beta would be 1.2.
http://www.marketvolume.com/glossary/p0218.asp
Portfolio beta
Definition: Used in the context of general equities. The Beta of a Portfolio is the weighted sum of the individual Asset betas, According to the proportions of the Investments in the portfolio. E.g., if 50% of the Money is in Stock A with a beta of 2.00, and 50% of the money is in stock B with a beta of 1.00, the Portfolio beta is 1.50. Portfolio beta describes relative volatility of an individual securities portfolio, taken as a whole, as measured by the individual stock betas of the securities making it up. A beta of 1.05 relative to the S&P 500 implies that if the S&P`s excess Return increases by 10% the portfolio is expected to increase by 10.5%.
________________
As to your specific question, I looked up the beta APOL (on AOL) and it shows as .16 (one decimal place less than the one you found). Given the swings and growth in that stock it does seem out of whack -- it could just be an error. Just glancing at a 5 year chart relative to the S&P and NASDAQ shows 500% growth for APOL and negative growth for the comparisons. This sure should produce a high (and perhaps a very high) beta.
As an aside, I sure wish I had backed up the proverbial dump truck on APOL in 2000. Outperforming the market does not get much better than this, even though the last year has been pretty rough.
Here is another article I found that boils some of the technical stuff down to common language:
http://moneycentral.msn.com/content/Investing/Simplestrategies/P84361.asp
Here is a discussion of negative betas:
http://www.marketocracy.com/cgi-bin/WebObjects/Portfolio.woa/ps/ReadTopicPage/source=IiCpDeGeDpJlNbI...
and another: http://invest-faq.com/articles/analy-beta.html
Thanks for the reply. I have been hoping that someone/anyone who actually uses them would reply.
As an aside, what level of service have you found to be worthwhile and do you find a need to utilize normal trades, either to hit a specific price or to trade stocks outside of their 4000 window stocks? At first blush, having an extra 200 window trades a month plus 10 free market orders available for an additional $100 a year seems like a no-brainer, but I also know that bells and whistles sometimes look better than they are in reality. Similarly, having the ability to further diversify has some appeal but I also recognize that it could quickly become so overly burdensome that it was not worth the effort.
Since this it somewhat OT here, we may want to move this discussion to #board-3946.
<<Foliofn is charging $39.95 a month plus, $3.95 a trade, plus all the other minimums requirements people neglect to address when they post new “lower” rates advertised by another on-line firm. However Foliofn is charging nearly $500 a year on it's monthly plus the $3.95 a trade which will be well over a $1000 is you are a active trader.>>
It is a shame that you cannot get your facts right or address the merits of an alternative idea honestly. But, of course, why should the facts matter -- it is just competition and we all know that bending or spinning the truth is acceptable in the name of promoting your own venture at the expense of competition, right?
This sure does not bode well for one looking for objective measures of confidence in your other representations.
<<Of course, this could workin reverse as well. Set Stop Loss Limits on the way down, converting 'Actual' to 'Virtual' along the way, but still continue to Buy at lower prices. >>
This has some visceral appeal -- after all, it you think a stock is going lower, selling it at that point and buying it back lower is still buy-low-sell-high.
But, aside from the visceral appeal, it also raises more questions. From a fundamental standpoint, if one thinks a stock price will continue to go meaningfully lower, then why was it bought long in the first place?
Absent irrational emotion, the new thought that the price could go meaningfully lower must have arisen either because of some event intervening between the time of the initial purchase decision (which, presumably, was made in the belief that it would go higher) and the point to which the price has declined to where you might stop it out. Material changes are usually good reasons to get out of an investment and limit a loss.
The only other reason (aside from intervening events) for there to be a material change in the assessment of likely price direction is a realization that we blew it on the initial assessment (in Tom's inventory management analytical comparison, bought a product that no one will buy and that will just sit on the shelf and deteriorate). Making that initial assessment on objective factors, rather than subjective or emotional factors, should significantly limit the pure big mistakes -- which again, are those divorced from a material change in the objective factors that should have advised the investment decision in the first place.
It also occurs to me that one of the core purposes for AIM's cash reserves is the realization that not all stocks will go straight up from the time of purchase. However, if one has chosen a stock that is fundamentally sound, the declines, absent major and sustained market direction shifts or other material intervening factors that changes the initial analysis, should not be overly significant That is, within the range of acceptable risk, and rather than presenting selling opportunities, the declines are buying opportunities. It goes without saying that no one should ever buy a stock that they are not comfortable (within their range of accepted risk) will rise from the buy point. However, by making an effort to balance investment with a cash reserve for risk, one has the ability within AIM to end up buying low and selling high, even if the initial buy decision, in hindsight, was made early and high. Assuming that the basic decision remains fundamentally sound, the cash reserve should roughly equate in most instances to the remaining risk of further declines.
AIM, as I understand it, is a controlled, mostly objective method to average down within reason and balance it to and with relative risk and to capture gains on the upside, within reason, and balance them and continued holdings with relative risk, without completely abandoning the investment on either end.
Of course, one of the hardest things for anyone to do is recognize fundamental or non-company specific changes in the validity of the investment decision or admit an error in the initial analysis. They both are counterintuitive to our normal mindsets. A stop-loss does provide protection from those changes and errors.
Some folks are just not able to sleep well holding stocks that have declined and sleep much better closing out a position for a loss (however large or small) rather than thinking it will rise from the point of lack of comfort. While there is nothing wrong with that, it is usually inconsistent with AIM's approach, as I understand it, of buying from the scared and selling to the greedy.
All of this said, I am the definition of an AIM novice and am still trying to get my arms around all of the conceptual nuances AIM presents -- not to mention Tom's variations. If I am off base or have missed something, I encourage someone and everyone to point it out. Just writing this out has helped me to conceptualize the goals and process.
Len:
I did not envision that this platform would be beneficial for day traders -- although $4 a trade is still a pretty darn good rate. Rather, it seems like a way to self diversify into 50-150 different stocks and to have the ability to trade each of them several times a month, whether for money management purposes or through increased investment money availability (dollar cost averaging) without getting killed on commissions.
For example, let's say someone has a $40K stake to invest (and I use that number simply because the $400 annual fee for up to 3 "portfolios" of up to 50 stocks each is 1% of the $40K). Let's also say that they want to add to this at the rate of $1K a month. Obviously spreading $1K over even 100 stocks ($10 each) in two to four separate purchases a month (200 to 400 trades -- 300 to 600 trades at 150 stocks) could add up to some hefty commissions in the regular brokerage context and would be cost prohibitive. This program, it seems, allows that to be accomplished for now more than the $400 annual fee.
Historically, a small investors only way to significantly or meaningfully diversify was through mutual funds managed by others at whatever load and expense ratio they happened to charge or incur. This allows the regular (small) investor to essentially put together their own mutual funds -- but to own the stocks directly. It allows them to own only the stocks within a basket (say the Dow 30) that they want to own without having to own the ones they do not want to own.
They seem to have two categories of stocks -- those they call window stocks (4000 of them, which are probably the 4000 most actively traded stocks) and all others. Only the 4000 window stocks may be traded within or are limited to the program's included 600 trade per month cap. These stocks are traded twice a day (11:00 a.m. and 2:00 p.m., if I recall correctly). They trade at either a split of the bid-ask at that time or at the market price at that time (if they have buyers and sellers within the system for the same stock it trades at the midpoint of the bid-ask spread at that moment -- if there are not buyers and sellers within the system (something I would not count on), the rest trade at the market.
Stocks outside of the window stocks trade like normal stock trades. Trading in the windows does not prohibit trading at any time with traditional market orders. The $400 a year program also includes 10 free market, limit, etc., trades a month and then the excess at $3.95 each. For most people, who are not day traders, this quantity should be more than sufficient for larger block trades. I will admit that it may not be for actively trading thinly traded BB or pink sheet stocks, with which I have little experience, but regular trades are regular trades and massive spreads are still massive spreads regardless of who the broker is. Even for active day traders, the average trade cost will still be less than $4 a trade.
As far as the company, they have SIPC coverage as well as excess coverage -- $9.5M if I recall correctly. The CEO is Steve Wallman, a former SEC commissioner. More on it here: http://www.foliofn.com/content/retailcontent/about_basic.shtml
I found them as a result of a marketing partnership (my characterization) they have with Reuters.
Here are a couple of recognition items:
Money
Money Tech 2000, Heroes: 10 Unsung Champions of E-finance
October 2000
FOLIOfn Founder and CEO Steve Wallman is named to Money Magazine's list of 10 unsung leaders in the world of E-finance. "Says Wallman: 'We want people to rethink the way they invest.'"
Fortune Small Business
25 Hot New Companies
May 2000
FOLIOfn is named to Fortune Small Business' annual list of 25 companies with breakthrough products, services, and technologies.
"Wallman has the vision thing ('We want to change the investing world,' he says) and several additional online products in the works. Move over, Mr. Schwab."
More at this link: http://www.foliofn.com/content/press/press_awards.shtml
They have an impressive list of business partners and investors (including Advent and American Century):
http://www.foliofn.com/content/retailcontent/about_partner.shtml
The one thing I am not worried about is the security of my money -- unless I have missed something.
The attraction for me is the ability the self diversify without incurring massive commission costs. I know of no one else who does this.
One of the things that has concerned me in considering AIM (and investing in general for that matter) with individual stocks (as opposed to mutual funds) is the relationship between diversification and commission costs -- especially if the account will be actively monitored and evaluated more frequently. It becomes difficult to diversify in a substantial enough way for there to be meaningful diversification without the commission costs becoming prohibitive in terms of percentage costs. It makes little sense to execute an order when/if the commission costs are several percent of the order value -- the broker ends up making money at our expense.
I think this may be a solution to the dilemma.
For a flat rate of $400 a year, one could hold 150 different stocks, execute over 7200 trades in those stocks (4000 of them), have 120 free market trades (10 free a month) in stocks outside of their window stocks, and make additional trades at only $4 each. Total commission costs for an actively managed and traded portfolio of at least $40K would be 1% or less annually. (They also have lower cost options (starting at $200 as I recall) for fewer stocks and trades). Even a small $500 order in a single stock if one had to pay the $4 would produce a commission cost of less than 1%.
The fee and trading structure on this almost seems to good to be true, which frequently means that it probably is. I am very open and receptive to looking at what I have missed and why this is not as good a deal as it appears.
The one weakness is the inability on window trades to know precisely what price you will get either way since those orders are processed only twice a day, but this is offset by the ability to modify or change the order at any time until the window closes just before the trade time. If you happen to be seeking a trade on a day where the market is moving quickly on a stock, and are not around to look at the price movement as it is happening, you could end up with a much different price than you expected. There are some percentage safety controls for this in their system, and they may be user configurable, but I do not remember what they are off the top of my head.
This is a little OT and a little spammish (but not personally), but here goes anyway.
One of the things that has concerned me in considering AIM (and investing in general for that matter) with individual stocks (as opposed to mutual funds) is the relationship between diversification and commission costs -- especially if the account will be actively monitored and evaluated more frequently. It becomes difficult to diversify in a substantial enough way for there to be meaningful diversification without the commission costs becoming prohibitive in terms of percentage costs. It makes little sense to execute an order when/if the commission costs are several percent of the order value -- the broker ends up making money at our expense.
I think I may have found a solution to the dilemma. I would welcome all input on Folio-fn (http://www.foliofn.com/index.shtml) either here or on the Folio-fn board. #board-3946. I have no personal or financial interest in Folio-fn other than as a potential trading platform.
For a flat rate of $400 a year, one could hold 150 different stocks, execute over 7200 trades in those stocks (4000 of them), have 120 free market trades (10 free a month) in stocks outside of their window stocks, and make additional trades at only $4 each. Total commission costs for an actively managed and traded portfolio of at least $40K would be 1% or less annually. (They also have lower cost options (starting at $200 as I recall) for fewer stocks and trades). Even a small $500 order in a single stock if one had to pay the $4 would produce a commission cost of less than 1%.
The fee and trading structure on this almost seems to good to be true, which frequently means that it probably is. I am very open and receptive to looking at what I have missed and why this is not as good a deal as it appears.
The one weakness is the inability on window trades to know precisely what price you will get either way since those orders are processed only twice a day, but this is offset by the ability to modify or change the order at any time until the window closes just before the trade time. If you happen to be seeking a trade on a day where the market is moving quickly on a stock, and are not around to look at the price movement as it is happening, you could end up with a much different price than you expected. There are some percentage safety controls for this in their system, and they may be user configurable, but I do not remember what they are off the top of my head.
Anyway, enough of this here. All comments welcomed.
Ideally, it would be nice to have the contents of a group "pop" open as a sub listing without opening a new page.
See:
http://www.capitol.state.tx.us/statutes/petoc.html
for an example. Left click on one of the subheadings to see what I mean.
I agree that it has some of the features of sharebuilder, but this seems to cost MUCH less and also seems to be far more powerful in terms of screening tools, tax planning (it lets you designate lots for sales), keeping track of the CG consequences of trades (and making it available to download in an importable format), and the ability to modify and customize all of the prepackaged options.
I have no dog in the hunt over who uses who (and really don't care), but I have not seen anything before that combines tools the way this seems to do so.
I have not pulled the trigger yet, but am inclined to do so. I just keep waiting to figure out what the gotcha is -- since things that look to good to be true usually are.
I know no one who has used them.
I was looking at the Gold package, which for $400 a year would get me the ability to hold 150 different stocks and make 600 trades a month (7200 a year) in those stocks (in dollar amounts -- fractional shares instead of larger lots of shares). It would also then get me 10 free market/limit orders a month and then extra trades at $3.95 each. The base annual cost would be less than one percent.
It does not appear to have some of the bells and whistles for exotic trades, but I would not need those for this account -- this would be long term money.
http://www.foliofn.com/content/retailcontent/investorlanding/price_comp.shtml
If you just keep creating new names, you will always remain a new member. Ask Matt, I'm sure he'll tell you it is okay.
Isn't Sarbanes-Oxley a new mixed cow breed?
Weren't cards and flowers banned?
Isn't nothing what most guys get on hump-day anniversaries?
63 T-Bird.
My 16 year old has found a 63 T-Bird hardtop for $3K that he would love to buy as his first car. The body is a bit rough, no big surprise, but it appears to run well and has nothing major obviously mechanically wrong with it. The leather interior is in GREAT shape.
Question - how available are parts. I am not worried about the labor end of fixing it when it breaks as much was very basic back then (ahhh for the good old days of no pollution equipment) and it would be good for him to learn some of it, but I am a bit concerned about parts availability.
<<NVEI is a tech stock>>
That would be funny if it were not so sad and historically inaccurate. Some things never change though -- this discussion, NVEI stock price direction, unfulfilled promises, new promises waiting to not be fulfilled. I take that back, NVEI has changed -- it has lost 80 percent or more of its value (although I cringe at even using the word value in the same sentence as NVEI) in the last couple years.
I'd bet it hits .02 before .50
Tom:
I would be interested in your thoughts about Folio-fn.
http://www.investorshub.com/boards/board.asp?board_id=3946
It sure looks like an very inexpensive way to maintain a very diversified portfolio. I keep wondering what the catch is since it looks almost too good to be true, which usually means it is.
It is unlikely that I will ever post here or anywhere else as frequently as I once did -- too many other things to spend time on.
I am really interested in someone else checking out the Folio fn concept and providing thoughts. While I understand that it has some limits as far as timing and advanced strategies, for basic, long term investing, I have never seen anything that lets someone hold a customized, significantly diversified portfolio (essentially, their personally created mutual fund), with so little cost -- a fraction of one percent annually, which is less than the operating costs of most mutual funds and close to those of most exchange funds.