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Much has changed; good investing has not
The Neatest Little Guide to Stock Market Investing, 2010 Edition
Over the past several years, I received volumes of complaints about Power Investor software published by Investors Alliance, which I recommended in past editions of my stock book. The complaints were consistent enough and frequent enough for me to pull my recommendation of the software from the 2008 edition of my book.
I wrote articles on Power Investor, and Investors Alliance president Frank Lardino said he would reply to some of the concerns sent by my readers who tried the software.
The following are select reader comments, and Frank's response or lack thereof.
I've used Power Investor for more than 10 years, and, as you noted, the service has deteriorated to a non-value. Thanks for using your forum to give a 'heads up' on Power Investor. My subscription, which comes due in August, will not be renewed.
I sent numerous e-mails advising of errors in their database. No response. No corrections made. I've had as many as 20% errors in their database in stocks I've investigated. Errors include -- wrong price data, ticker name changes not corrected.
For example, PLB (American Pasta changed names months ago, but not on their database). It changed to AITP.PK (per Yahoo Finance) some time ago. I brought this to PI's attention some time ago.
BGO (Bema Gold) no longer exists. They have been bought out, don't remember by who. Did not bring to PI's attention.
SCHK is still on their Ben Graham screener list. SCHK does not exist, has been changed to SIRO (per Yahoo Finance). In PI, it has been listed as SCHK for months. I brought this one to PI's attention some time ago as well.
I have telephoned, and usually someone answers. State problems. Advised to send e-mail. Do so. Absolutely NO response to many e-mails. (Just for the heck of it, check out Investor's Alliance using their Ben Graham screener. For months had a stock that, apparently, is no longer traded or has a symbol change.)
I've spoken to Frank on the telephone, and he seems like a nice person. Really sorry to see them sink to present state.
We specifically tell members that we cannot send name changes, ticker changes and purging of dead companies via electronic updates. This is why we have the CD ROM updates for an extra charge. This man paid $99 for a single ROM update and this is why he is not getting the updates. In some cases we also do not pick up stocks when they go to .pk or pink sheets.
Garry followed up with:
I have no problem not being informed that tickers have changed, or not being notified of new company tickers that have been added to the market.
I have a problem using a faulty database. If a ticker no longer exists, it should be deleted from the database, not treated as though currently active. When I update the database daily, I assume the information is correct. This has not been the case in many instances.
I've forwarded errors I've found to PI, but the information has been ignored.
In summary, a database that contains tickers that no longer exist, and recommends tickers of companies that no longer exist, is of little value to me. In the past I've used PI extensively in making stock-purchase decisions, but lately the info provided has so many errors it has become a waste of time to use PI.
I hope that PI is able to solve these problems.
As I stated in my email and as we tell members -- this is why we offer quarterly and monthly PI ROM updates. We do not ignore emails with name or ticker changes or any emails. We also cannot do seven-digit pink sheet tickers and we also do not advertise that we cover pink sheet stocks.
Regarding PLB, which became AITP.PK, we have made the change but our master database cannot accept seven-digit tickers. The period is needed. PK is pink sheets.
Regarding BGO, it died on 2-27-2007. We cannot electronically send delistings of stocks.
Regarding SCHK, We changed it in the master database, but cannot send name and ticker changes electronically.
I was a PI member years ago, when I first read your book. It was good then, and I used it on a regular basis for screening and tracking stocks. Too bad I can't say the same today.
I recently tried to sign up again, and even though it looked as if I had via the website, I was unable to confirm that I was charged for the membership. I never received any confirmation email from IA, nor did I see any charges on my credit card.
I made numerous attempts to contact IA to get the information I needed. While the calls I made were answered quickly, I was given the same response each time. "We will have someone call you back, can you give us a contact number" -- after hearing that three times and sending several emails, I finally got a bit upset with the person on the phone. I was told that Frank was handling all the new accounts and that he wouldn't be in till later, but they would have him call me. Needless to say, that call never came. I made one more attempt to call them, and even asked to speak with Frank, but of course he was unavailable, but if I left my number, he would call me back.
I didn't bother leaving my number, didn't bother saying goodbye, I just hung up the phone. That happened just before I contacted you last month about this issue. I think I would have to say that even IF they say they are better, I expect a hell of a lot better service from a company from which I have purchased a product. I would rather use the free on line tools, that put up with lousy customer service.
So, thanks for your advice on the free on-line screening programs, and keep up the good work. No matter what IA says, I say stay away. I know I will.
He works for a company that provides fundamental financial data. He would call from his company and then tell us to call his cell phone. Our source of the data is the 10-Ks and annual reports. We wonder why he is reluctant to disclose his identity and possibly his employer's identity.
I finished reading your little guide to investing a month ago. It truly was an excellent book well done. After reading it I looked in to some stock picking software packages but some were extremely expensive. In the end I opted for Power investor. I would have to agree with your new view that the service is poor. To date I have not received the CD or book I ordered, but being Irish living in Australia I am allowing a few weeks for delivery. I emailed power investor support who advised me it is being shipped. Fingers crossed...hopefully.
Frank sent the materials via Global Priority Mail, and followed up with numerous emails until Declan finally replied, "I have been working away at a mine site for the last fortnight and have only now accessed my emails on my return to Perth. I am happy to say that the Power investor pack arrived while I was away."
I signed up for it and don't like it. It seems Yahoo can do it all and look a lot better while doing it and not require daily downloads. My complaints came mostly from their welcome booklet which I actually sat down and read. It was packed with incorrect info, including their address and phone number.
Frank did not reply.
Kieu T.H. wrote:
I recently tried to subscribe with Power Investor. I tried to subscribe online but it didn't go through. So I called many different times and either no one picked up or I would have got the secretary. I talked to the manager (I forgot his name) once and he was on some kind of a rush, he told me that I will need an invitation by mail in order for me to become a member, he wrote down my address and said something else that I couldn't understand and just hung up on me.
I called back right away but this time i got the secretary and she said he is out for lunch that I needed to call back. I called back several more times and every time she had a different excuses for him. Finally, she told me to call back after 6pm. I asked her what is their operation hour and she said from 8:30 to 6pm so I asked her how could I be able to get in touch with him if i called him after operation hr, the lady told me that he is usually be around after operation hr so just call. Well, I did and no one picked up. So you got the idea!
The point here is not how many time I called or whether if he is busy or not, but I do not appreciate the customer service that Power Investor offers. Frankly, I believe if I'm the customer and I'm paying for the service, I should be able to get what I want at anytime I want. With today technology, I should be able to have instant membership whenever I wanted. Why should I need to even make calls and wait for the membership. What would happen if down the line I have to technical problem or just a quick question about the software? Would I then need to make an appointment or something?
Frank did not reply.
IA is actually in denial on their services. I believe IA was ahead of the competition in the 1990s, however not in the 2000s. Again IA has some value, however it is limited today since there are more cost effective tools available.
I used IA's Power Investors (PI) and Power Tech (PT) for a few years. The sad thing is PI wasn't user friendly for cut and pastes or exporting of data. PT for years never lived up to the hype. PT barely ever worked as advertised and crashed my system (or the application crashed/closed). Most of my emails were ignored. The monthly IA journal decreased from 12 issues per year to ~6-8 per year, however they continued to advertise as if there were 12 issues. The model data results were nearly always outdated on the website. The downloads had problems, however it wasn't much of a problem for me. The benefit of downloading the data is you get to work offline.
Now, for ~$99 or ~$225 it was worth the experience however today there are so many more tools/sites available like: Zacks, Google, Yahoo, MSN, StockCharts and Worden's Telechart plus I'm sure many more sites.
In summary, IA had a place, however they lost their luster and edge. The internet toolsets are more readily available and outdo IA. True, their "Triple Test" capability is a little more difficult to create, however I don't have all the problems of IA anymore.
He complains that he cannot export the fundamental data. We clearly tell members the data is non-exportable and is a violation of our license agreement. So, Don is complaining that we do not make it easy for him to violate our user license. We regularly get people calling us trying to buy the fundamental data for export. We do not provide that service. The data is our property.
I followed the advice and bought PowerInvestor. I used it about 4 days and then put it on a shelf. I found in slow and really not valuable. Some of the stocks that I held at that time were not covered by the software, and the constant downloads became annoying.
As you stated, there are many free sites that are quite excellent. I trade on Scottrade and they have upgraded their research tools. I consider that "free" since one only needs $500 to open an account and there is no minimum activity [except for Scottrader Elite], and I get real time quotes.
I also subscribe to one or two sites that I find extremely useful for real time analysis.
I believe you are correct to stop recommending PowerInvestor.
Frank did not reply.
I used to have Power Investor for years and in fact I belonged to it in the first few years when we even had a Power Investor Conference in Fort Lauderdale which I thoroughly enjoyed (I am sure way over 10 years ago).
Even though the potential was always there (good magazine, software was good), the data was awful -- everything, mutual fund data was never corrected for dividends, etc. Stock data was never corrected for splits until many months later, earnings, dividends, cash flows, all the economic numbers, etc. were old data.
The question became: what good is good software and magazine when you cannot depend on the data so I quit after a few years and a couple of years later rejoined thinking that maybe they had straighten out but no dice. I cannot believe their customers put up with data that is no good. I guess I did for some years thinking it can't go on much longer.
I have not used Power Investor for many years now as I have been using other software which is very reliable and squeaky clean data.
If Investors Alliance ever got good data, I would gladly pay the $99 per year. Please check what you get for $99 because as I remember it used to be only the first CD and you would have to put up with whatever errors might be on the CD unless you purchased another or paid much higher yearly fees for quarterly or monthly CD's.
As far as support, only email support was available and it was very infrequent the times you would get an answer to any email. The only phone they used to have was strictly for membership renewals, etc.
That is enough for now. Again as I said, it has been many years since I quit and from what you stated they have not done much better since.
Frank did not reply.
I have to be honest, the software is not up to date at all. Let's go with the interface first, its looks and feels like its dated in windows 3.11 days (Or the software is built on Windows 3.11 Libraries or something). Worse is that the software doesn't really have a proper uninstaller.
Aside from the extremely old software...I am quite positive about the security issues that the software might have. The way member information is transmitted from the software to the web -- is probably non-secure.
Accessing the membership info on the website is done on a non-secure website. Almost all major sites on the Internet (I can't think of any which doesn't) use secure login to access one's profile or member page. Look at Yahoo mail, Google Gmail, MSN Hotmail, etc (Sorry, only using mail websites of an example). It is not very hard to enable secure website login.
So in a nutshell, I just don't see them investing time and resources on their software and packages. I had stopped using Power Investor software in about few weeks after I subscribed to their service. Yahoo Finance and Google Finance and few other web tools out there are much better for me. Power Investor may have been great like many years ago, but today is not to be at par. And it doesn't even have all the stocks that I want to look for. For example, I was doing research on CME, BOT and ICE -- I did not find them in the software.
Help desk service is pretty much nonexistent also. I have triedcalling them up -- it took me few days to get hold of someone. But they did respond, so I am not that picky, but what irked me is that I had to give my credit card info on the phone to some stranger for subscription (This was in 2006). I will never subscribe to anything, if I can't do over the web securely.
And ironically, they now have an option to buy their products, but I believe the page was created recently and once in Power Investors website -- the order page will take one to https://shop.powerinvestor.com/ and if you notice the page is missing an icon or a pic on the top left. On Internet Explorer it just shows a box with a X on it. I will always be hesitant to order something of a broken website (it seems minor breakage) where I might have to enter my credit card details.
I am only a year old in the investing world. But so far, Power Investor has just failed to impress me.
He claims our order site is unsecure and our downloads are not secure. He does not have a clue about the downloads. We do not give anyone cookies or other hidden files when they come to our web site like Yahoo and others, The downloads and web site are totally secure. We have provided over 30 million downloads over the past 17 years that have been totally secure.
That's the latest.
I'll let you be the judge on whether or not I did the right thing to pull my recommendation of Power Investor from the 2008 edition of my stock book.
I wrote an article on July 23 withdrawing my recommendation of Power Investor software. It appeared in the previous two editions of my stock book, but will not appear in the newest one out later this year. In the article, I wrote:
"Starting a few years ago, I began receiving complaints from readers who followed my advice to buy [Power Investor]. The data set was old or incomplete. The calls to customer service weren't answered. Emails went unreturned. Finally, the organization behind Power Investor looks to be folding, because the latest is that it's no longer accepting new subscribers."
Yesterday, the president of Investors Alliance, Frank Lardino, sent me the following email:
Investors Alliance is not "folding" as you have reported incorrectly on your website. Calls to our 800 number ring in our office, and are picked up usually on the second or third ring from 9 am to 6 pm EST M-F. We have a phone number (regular & toll free), email address, and street and P.O. box addresses (in the United States) on our website for members and other people to contact us. We answer phones calls, and we return calls as well as emails and letters. Feel free to call me if you wish.
I replied with this:
I'm happy to finally hear back from you. I've tried contacting you several times by email but never received a reply.
Starting about two years ago, I began receiving an increasing volume of complaints about Investors Alliance and Power Investor. People read my book, took my advice, signed up, and then could not get current data in the program, nor any help from IA. I didn't create the impression that you're folding out of thin air. The evidence from your customers made it look that way.
It's too late for IA to get into the new edition of my book and, frankly, Power Investor no longer shines above the competition, particularly since so much of the competition is completely free.
However, I used PI for years, spoke with you in the past, respected your operation, and recommended PI in the two previous editions of my book. Therefore, I'd be more than happy to run your side of the story on my website, along with a link to your site.
I hope that you can streamline the functionality of PI so that it doesn't require data downloads, for example, and that you can create a better customer experience for subscribers. I would like to one day be able to recommend PI again.
Mr. Lardino replied with this:
We continue to service members and make improvements to the services we offer members. We provide refunds to people who are not happy with the service and we cover the vast number of companies with complete data.
Our analysis is far more powerful than free web offerings. The free offerings generally allow you to screen a few criteria at best and usually they omit screens like ROE or ROA. Screening for data going back more than a year is usually not included.
In addition, for $99 people get a monthly journal, powerful asset allocation models, a free online investing course, other member services and one of the best technical analysis programs available. The methods we provide including Triple Test are outstanding and are included with the $99 membership. The dynamic asset allocation models are worth $99 by themselves. They have been proven to members in real time from 1998 to 2001 in vastly reducing equity allocations to no-load LT govt bond funds -- going to zero coupon no-load funds at the end of the bear market and back to equities in 2002. Most recently, the models have decreased their exposure to equities at the start of July. This is all part of the $99 membership.
We will be offering a web-based version with fundamental analysis and screening in the near future. As far as improving the customer experience by web enabling all of our services, we think application software is superior for charting. Web-based charts are weak, even when using newer technologies like Java with Ajax or .net with one-click. The web charting lacks suitable user control. Power Tech also offers superior technical screening and proprietary screening that is unavailable in other programs. In addition, we also offer our Sector, RS & Delta models with the premium memberships which have been used by members for the past eight years in real time with excellent results.
Members receive our 34-page ejournal each month as part of the $99 membership. The journal includes educational, research and other articles, including how to use the software programs.
Power Investor also includes valuation models and management ratings on the stocks which are not available on free sites. These tools have been used by members since our old DOS software in 1990 as well as Power Investor. The models and ratings quickly help members find very well managed companies as well as potentially under and overvalued companies. The 4- and 5-Diamond rated stocks have consistently done very well over the past 17 years.
No need to provide an update with our side of the story just modify the part about us folding up. If you need to call me, our phone number is on the web site. We are always available.
There's the latest straight from the president of the company. His presentation makes membership in Investors Alliance and use of Power Investor seem worthwhile. It's hard to know why customer reports were so very different from his report.
In the interest of getting to the bottom of this, I invite anybody who has joined Investors Alliance to email me with their experience, good or bad. If you emailed me before about your experience with IA or Power Investor, please send me your story again.
I'll present the reader stories to Mr. Lardino, give him a chance to reply to each one, and then run the whole sequence here in the future.
In the first two editions of my stock book, I recommended Power Investor software. I also linked to it from various places on this site. The $99 price for such comprehensive research software was a bargain, in my view, and supported much of my stock research for years.
Starting a few years ago, I began receiving complaints from readers who followed my advice to buy the software. The data set was old or incomplete. The calls to customer service weren't answered. Emails went unreturned. Finally, the organization behind Power Investor looks to be folding, because the latest is that it's no longer accepting new subscribers.
More than any of that, though, the reason I stopped recommending the software in the third edition of my stock book, due out later this year, is that it's no longer necessary to pay for stock research databases. There are excellent, free ones available online that have become good enough to rival the paid versions. They are the ones I profile in the new edition of my stock book.
For my many readers coming here each day, however, the new information can't wait. Below, free of charge, is the entire Stock Screeners section from the third edition of The Neatest Little Guide to Stock Market Investing:
Since the earlier editions of this book, it's become easier and cheaper to find good stocks. As recently as a few years ago, stock databases came on CDs. You had to install the programs, then get data updates by downloading files from websites or receiving new CDs every month. The programs were expensive, too. Some cost more than $500 per year.
Free online stock screeners have changed the rules. Pros used to scoff at pared-down tools from places like Yahoo! Finance, and some still do. The thing is, free tools are no longer pared down. They do everything an individual investor needs them to do. Much as I've looked -- and I've looked a lot -- I can't see any compelling reason to pay for stock software anymore.
All you want from a stock screener is quick, easy research that allows you to make your own best decisions. With that directive in mind, let's look at three screeners.
Yahoo! Finance Stock Screener This is what I use every day. It provides fast results that you can sort by any criterion. If you get too many companies, just add more criteria to whittle the list down, or make your parameters stricter.
For instance, in March 2007 I was interested in companies that had a price-to-sales ratio (P/S) below 5, a price-to-earnings ratio (P/E) below 20, and projected earnings-per-share (EPS) growth in the year ahead of more than 25 percent. I typed those criteria into the screener, and received 184 results.
That was too many, so I increased the growth rate to 50 percent. That still left 68 companies. Next, I dropped the P/E to 10, and got a tidy list of 20 companies. I clicked the "Growth" criterion header in the results table twice to re-sort the list in descending order from highest growth rate to lowest. The whole process took less than two minutes.
The fastest grower was LaBranche & Company (LAB $7.50), a New York City broker-dealer. It had a P/S of 1.1, a P/E of 3.5, and projected one-year EPS growth of 950 percent. I clicked to its key statistics page and found that the company had a healthy 31 percent profit margin, was 12 percent insider-owned, and that its $7.50 price was its 52-week low. That was down about 58 percent from the almost $18 it had fetched in April 2006.
I was curious to know what had happened. I clicked to its news page and discovered that the firm used to make its money by offering floor trading services on the New York Stock Exchange. As the exchange became electronic over the years, few people needed floor traders anymore, so LaBranche's earnings tumbled. Its market-making business was down 24 percent in the previous year. CEO Michael LaBranche said that his firm was slashing expenses and looking for ways to prosper in the new electronic marketplace.
Whether or not LaBranche succeeded (see for yourself by typing "LAB" into Yahoo! Finance and checking its current price) is not our concern here. What I want you to appreciate is how quickly I was able to find this potentially profitable recovery story using Yahoo! Finance Stock Screener, and how easy it was for me to conduct additional research with just a few mouse clicks.
The basic HTML screener is usually fine for me, but Yahoo! also offers a Java screener that's fancier. It has a regular desktop software-like interface instead of a webpage interface, and offers more screening criteria. It, too, is free.
For $14 per month or $132 per year, Yahoo! offers an even more deluxe screener with real-time data. I don't see why you would need that unless you're daytrading, which is stressful, costly, and ineffective. Why pay for tools that encourage that lifestyle?
Morningstar Stock Screener Morningstar's screener is another good alternative. It taps into the firm's helpful analysis tools like its stock types, equity style box, and grading system.
In March 2007, I screened for aggressive growth companies with "A" grades for growth, profitability, and financial health. That turned up 51 companies. I then clicked the "Score These Results" button and went to a score card where I could specify the importance of each criterion by clicking radio buttons between 1 and 10 beneath it.
The list of the top ten scoring stocks appeared to the right of the criteria and was updated on the fly as I clicked away. Consistently leading the list in this example were American Oriental Bioengineering (AOB $10) and Chico's FAS (CHS $22).
MSN Money Screener and StockScouter MSN Money's screener takes a different approach. Its interface is simple with dropdown menus that keep searches focused on basic notions rather than specific data.
For example, the choices for P/E are just "Any," "As high as possible," and "As low as possible." The idea is that you probably don't care specifically if the P/E is 9.7, but just that it's low. The data set returned is usually small, but unfortunately it can't be sorted. I find myself feeling that something is being missed with this screener. It's just a little too basic, but could be handy for quick ideas.
A more useful tool to me is MSN Money's StockScouter. It's a rating system that assigns some 5,000 stocks a number from 1 to 10 on a bell curve, with 10 being the best potential for beating the market. In March 2007, there were 148 stocks rated 1, 670 rated 5, and 148 rated 10. I clicked on the group of 10-rated stocks, wondering as I did so why anybody would go anywhere else.
The group came up in a table with sortable column heads, and I could add columns to the table by checking boxes next to additional criteria. I sorted the table in descending order from highest to lowest expected six-month return. The top 42 stocks were projected to gain 15.17 percent in six months, and included Audible (ADBL $11), Freeport-McMoRan Copper & Gold (FCX $56), and Oceaneering International (OII $39).
Finally, MSN Money offers a deluxe screener via download. Personally, I prefer keeping everything online.