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Now comes the hard part--making money in a market where everything isn't going up. For that, you're going to need some serious tools. Logging onto one of those chat rooms populated by pompous pundits oh-so-sure which stock will be a winner won't cut it any more--as if it ever did.
Unfortunately, just when you need them most, some of the Web's best tools are nowhere to be found. Sites like Stockmaster.com went out of business, while others, such as Outercurvefinance.com, stopped dispensing free information, deciding to sell their wares to the brokers, brokerages, or mutual fund companies that would pay. Even FreeEDGAR has stopped providing some of its free tools, sending users to a sister site, Edgar Online, where they cost $9.95 a month. Still, with at least 15,500 investor sites out there, a bounty of free calculators, screening tools, and information resources remain (table). And before you pay for a tool you just have to have, check your broker's or mutual fund's site. It might be there for free.ALL THE RAGE. Web offerings have taken a decidedly practical turn since last year's market crash, says Douglas Gerlach, founder of Investorama, which compiles and rates investor sites. Tools like Portfolio Science that help gauge the risk of an investment or portfolio are all the rage. And investors now have access to their own stock-valuation models. Even dowdy portfolio managers and asset allocators are suddenly in style.
We've gathered a handful of the most useful tools, leaning toward the more established offerings, since no one wants to share financial information with a site that's going to collapse and sell its subscription list. And we've focused on tools that let you weigh an investment's value based on fundamentals like profits and cash flows. Technical investors who rode the momentum bull got thrown last year when the trend headed south.
For a quick visual sense of how the market is faring, check out SmartMoney.com's colorful, Rubik's Cube-like Map of the Market. Its blocks, representing specific sectors, are subdivided into the stocks within each sector. The tiny squares change from red to green, depending on whether each stock is down or up, creating a crazy quilt of winners and losers. The site offers free real-time stock quotes to those who register.
If you're still bold enough to pick individual stocks, you'll want some screening tools. Quicken.com, from the company that makes the tax and personal-finance software, offers a particularly clear set of stock screens so you can trawl for equities that meet your own criteria, such as market capitalization and price/earnings ratio. Our own Businessweek.com boasts three screens--one for quick searches, a more advanced version that scans 74 variables (ranging from beta, or stock volatility, to cash-flow growth), and a third based on the criteria BusinessWeek uses in its annual ranking of companies in the Standard & Poor's 500-stock index.
Once you've got some potential buys, you can run those companies' fundamentals through a discounted cash-flow model like the one at ValuePro. Such models have cropped up on a handful of Web sites, letting even those without an MBA run a company's numbers to come up with its value, based on things like earning power and debt load.
Since you'll want to get beyond what the analysts are saying, Nasdaq, run by the people who operate the market, lets you see if insiders are buying or selling, often a clue to a company's prospects. It carries reports for exchange-listed stocks as well. The site also provides Securities & Exchange Commission filings. (Of course you can also get them by clicking on Edgar at the SEC's site, www.sec.gov.)
Investors tormented by margin calls during last year's market slide will appreciate a tool developed by content provider Tradeworx for the SEC site. It lets you calculate the cost and risk of buying on margin--using money borrowed from your broker.
Finally, Bloomberg.com has a calculator that compares what you might earn from an investment, minus taxes and commissions, if you hold long enough to qualify for long-term gains, versus what you would earn by selling sooner (assuming no unexpected change in price).TAX BITE. Many stock investors have recently discovered the charm of bonds, and Web sites offer help for them as well. Bondsonline lets visitors shop for bonds by various criteria, such as rating, yield, and whether the bond is corporate or municipal.InvestinginBonds.com, sponsored by the industry's Bond Market Assn., provides a handy tool that calculates your tax bite based on your income and home state. It then presents a chart showing how large a return you would need from a taxable investment to net what you'd get from a tax-free municipal bond. Just logging on to check your state tax rate is worth it.
Those spreading their risk with mutual funds can choose from a bevy of screens and ratings tools. One of the best comes from Morningstar, the people who have been rating funds 17 years. Morningstar.com's screen lets you shop for funds by picking criteria such as style (large growth, small value, and so on) and level of returns. Unfortunately, one of the site's most intriguing tools--its Portfolio Stock Overlap, which sifts through the stocks your funds hold and those you own directly to reveal any overlap--costs $99 a year. More free tools can be found in Yahoo's finance section. One lets you see how much a fund's loads and fees cut into its return.
For the mundane tasks of managing your portfolio and planning for retirement, lots of sites have tools. The best allow you to segregate taxable from tax-deferred accounts. FinancialEngines' free service is especially helpful: It tracks assets in your portfolio and doubles as a retirement tool, automatically updating your portfolio's value and projecting how much it will provide in retirement. This site reserves some features for those who pay. But many corporate retirement plans offer the souped-up version to employees.
Other sites, such as Quicken.com, lead users through a more complicated process. But be careful. If the numbers look odd, it may be because of a glitch. The Quicken calculator on AOL.com, for instance, could not quite grasp the notion that someone might want to exceed the $10,500 pretax contribution limit and add aftertax dollars to plump up a now shrunken 401(k). Hence, it underestimated the amount saved.
Guess nothing comes easy. Even with Web tools, you need to be a bit skeptical. By Carol Marie Cropper