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Investment tools for the small investor
Today, the small private investor has the
tools to make investment decisions that hitherto had been the sole
province of the professional fund manager.
Essentially the facilitator has been the internet. This article
describes the more important of these tools that can be found on a
number of helpful websites. I use
www.iii.co.uk and have done so for
a number of years.
Obtaining a stock quote
The facility finds share information on any company listed on the
London Stock Exchange as well as New York equities, NASDAQ and many
other markets. The share code (called epic) or its name is entered
in a special box and up pops information such as the current bid and
offer price, the high and low of the day, the volume of shares
traded. The one qualification is that the price will have a fifteen
minute lag to actual market strike price.
Charting
The charting facility (for those wanting a serious study I recommend
“Marber on Markets” published by Harriman House) allows the input of
a time period, for example, the past 6 months, year or 3 years, and
there will appear a graphical display of the share price movement so
that the trend line is apparent. The graph will also show a block
diagram of volumes of trade either as millions or thousands of £
value and coloured red or blue to denote sales or purchases. Much
more sophistication can be added by the advanced user such as
plotting alongside this share, the movement of other named shares.
Heatmaps
Heatmaps offer an instant view of the best and worst performing
shares, sectors and indices. A matrix of cells is resembled similar
to a spreadsheet. Each stock occupies a coloured box, the risers in
blue, the fallers in red. Comparisons with past trends can be found.
Screening
This is a most powerful tool once a selection has been made of what
stock criteria is being “sifted” for. For example, dividend yield,
PE factor, PEG factor, dividend cover and so on.
Portfolio
Perhaps the most useful tool in turning the amateur into a
professional investor is the ability to build the personal
portfolio. The portfolio holds the shares purchased on-line and, in
effect, is a phantom representation of what used to be the shares
file held by the broker acting on your behalf. The beauty of
actually buying and selling shares
using a website such as iii is that the driver of the site is the
custodian and the investor will never actually see the paper
documents. All dealings are purely electronic. The portfolio is so
important that a separate article will be devoted entirely to it. |
