Financial Literacy

Five Investment Tools You’ll Need To Succeed

Five Investment Tools You’ll Need To Succeed

by Dr. Steve Sjuggerud, Investment U Advisory Panelist
Thursday, September 12, 2002: Issue #170

The investment tools available online these days are incredible-and in most cases, more than you’ll ever need. In today’s message, I’ll outline for you everything that you really need to succeed as an investor.

A year ago, when I was running a hedge fund, I was able to try every sophisticated investment tool out there. Bear Stearns (my prime broker) provided me with incredible tools to know my portfolio risk at all times. I took research from the awesome outfit Ned Davis Research (www.ndr.com). And I had more computer software than you can shake a stick at.

But you know what? You don’t really NEED all this stuff. I’ve come to realize this personally over the past year and during that time, I’ve discovered that what you DO need is – for the most part – both inexpensive and easy to get.

So what investment tools do you need? Not too much actually. A common question I get is, “Steve, what do YOU use for this or that, when it comes to investing?” Today, I’ll tell you.

Five Investment Tools I Use To Get an Edge

Investment Tool #1: The Computer

First, I don’t use a fancy $5,000 computer.

The Hewlett-Packard you can buy at Wal-Mart right now for $568 is a little nicer than what I’m writing this message to you on (once you spend an additional $40 bucks to add some more memory). I often have many programs open at once, and my computer never crashes. If you’re looking for a new machine, the $568 HP will do more than you’ll ever need. If you know a little about computers, you can get an even better deal on a machine at www.TigerDirect.com, and you can buy your screen separately from them as well. I prefer a big screen – my CRT monitor is 21 inches. TigerDirect has 19-inch CRT monitors from $129 – a purchase worth making to save your eyes.

Investment Tool #2: The Internet Connection

For me, the most important tool in my investment strategy is my Internet connection. For my needs, I can’t bear painfully slow dial-up modems. I don’t need a $5,000 computer, but I do need broadband. I need to work as fast as I’m thinking, and with slow dial-up modems, you lose your train of thought. I’ve tried all the broadband services – broadband, satellite, wireless modems, you name it, and I’ve had the best luck with DSL. While broadband is absolutely essential for me, if you’re just using the computer to check e-mails or get a stock quote or two, then you can probably get by without it. But for me, it’s about the best $45 a month I spend. Try a friend’s if you haven’t used it yet. You’ll be hooked immediately.

Investment Tool #3: The Software Programs

If you want to use your computer for more than just e-mail and surfing the Internet, you’re going to need some software programs. I’ve tried all the expensive stuff – literally I’ve used software and stock investment tools that cost $25,000 and more. And trust me, you really don’t need it. Microsoft Office does nearly everything I need to do. And now, you can get the near equivalent of it online for free at www.openoffice.org, saving you hundreds of dollars. If you’re not computer savvy, buy the $75 version directly from Sun instead, at www.sun.com/star as it comes with support. (It doesn’t come with an e-mail program, but use Microsoft’s free “Outlook Express” program that comes with your computer. It’s all you need.)

Investment Tool #4: The Personal Finance Software

For Personal Finance Software, Quicken and Microsoft Money are the standards. After reading the reviews, it seemed to be six of one, half a dozen of the other, but Money supposedly had an easier-to-use visual layout. So my wife and I are using Microsoft Money now, but we’ve just started with it. We’re keeping it simple, using Microsoft Money Standard, not Deluxe. It’s only $29 and is available at.www.microsoft.com/money. The program is really nice, once you connect your computer with your bank account. Our bills are paid online instead of having to manually write checks, and our expenses are automatically categorized by Money, so we can see where our money goes. Microsoft offers a 60-day free trial. Worth a shot – but it’s only as good as what you put into it, and it does take time

Investment Tool #5: The Web Sites

Regarding Web sites that I use as investment analysis tools, well yes, it’s a big laundry list. But the site I use most often – for nearly everything – is Yahoo!. Let’s break them down into categories

  • Stock Quotes: I basically use Yahoo! (http://finance.yahoo.com) for most stock information. It’s an amazing stock and investment tool. Five years ago, you had to pay Bloomberg $20,000 a year to get what Yahoo! now gives you for free. And it’s easier to use.
  • Stock and Investment Research: Decent independent stock research is hard to come by. The best bangs for your buck are probably these two: www.morningstar.com and www.valueline.com For many investors, it’s worth the small cost to get an independent second opinion.
  • Stock Charts: Yahoo again. BigCharts.com is good for interactive charts if you want to see something else that Yahoo doesn’t provide. I’ve used all the expensive investment tools in the past, including the popular technical analysis software programs MetaStock and TradeStation. And while they’re excellent, unless you’re a day trader or some other kind of intense technical analyst, you don’t need them. (There are many add-ins for Microsoft Excel that do the same stuff much cheaper, like www.analyzerxl.com, for example.)
  • Stock Data: Yahoo gives good data. But there are some holes. To plug those holes, I use www.globalfinancialdata.com, which has historical financial and economic data going back to the 13th century(!) in some cases. When I’m doing historical research, this is my first stop. For government data, the Federal Reserve of St. Louis is easy and free; you can visit its site at http://research.stlouisfed.org. For gold, www.kitco.com and www.gold.org have free data. If you need to download data regularly, and you have Microsoft Excel, use DownloaderXL. It’s cheap and good; you can get it at www.downloaderxl.com (Quick note, the folks at Global Financial Data, Inc. have offered to give Investment U E-Letter readers 30% off purchases of $200 or more – enter the number 30 in the promo code section when you place an order www.globalfinancialdata.com.)
  • Stock Screening: There are many excellent free stock screeners, with benefits to each. Two easy ones to use are found at www.quicken.com and www.morningstar.com. I use Microsoft’s Deluxe screener: http://moneycentral.msn.com/articles/common/finderpro.asp
  • Stock News: No real secrets here – The Wall Street Journal Online (http://www.wsj.com), and Yahoo! are the ones I use. The online “Wall Street Journal” subscription, which comes with an online subscription to “Barrons,” is very cheap and is a good value. www.marketwatch.com, www.Fortune.com, and www.Forbes.com are useful sometimes as well, and they’re free.

The technological revolution over the last five years has just been amazing. And you and I are big beneficiaries. We can now be armed with as much information and speed as the world’s biggest investors, and it only costs us $500 for a computer and $45-a-month for a broadband connection.

Of course, you don’t need to be online. It’s true. You still just need a telephone to make a trade. And your local library has plenty of information – it’s probably even got a Value Line subscription, and you ought to check it out. You can stay “old school” as long as you want.

But with the wealth of free or close-to-free information available on the Internet, you can now do a ton of investment homework with these tools in an incredibly short period of time. Your bills are paid automatically. You can automatically see where your money goes with your financial planning software. And you can screen for stocks based on criteria you choose – in seconds.

Try some of these investment tools out, you’ll be pleasantly surprised at the difference they can make.

Good investing,


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