April 12, 2011, 11:17 a.m.
posted by handcore
Whether your portfolio is small or large, the market's daily gyrations can be nerve-racking. The thought of a favorite stock tanking in a matter of seconds leads many investors to compulsively check their portfolios 10, 20, or even 50 times a day. Instead of constantly interrupting your work, you can set up a group of portfolio alerts to notify you when something's going on with an individual stock or your entire portfolio. Several popular financial sites offer alerts for free, but you can access outstanding alert functionality when you subscribe to Morningstar's Premium service. In addition, some brokers offer automated alerts as part of their online brokerage services.
Alerts tell you when events occur so that you don't have to check for them. For example, you can set alerts that trigger when an individual stock's price or volume increases or decreases more than a specific percentage value; when a company announces quarterly earnings, distributes a dividend, or announces a stock split; or when analysts downgrade or upgrade a stock rating.
Although long-term investors don't care about daily price variations, it is important to know that a company's stock price has shot way up or down. You probably don't want to receive alerts every hour or even every day about stock prices—unless it's a company you're watching very closely. Stock prices are notoriously volatile, to the point that a 10 percent increase or decline in a day is a regular event for many stocks. Set price alerts at a big enough percentage change so that the alert means something. For example, 15 or 20 percent changes usually don't happen without a catalyst, such as a bad earnings announcement that catches everyone off guard or a takeover offer.
Volume alerts tell you when the amount of trading in a stock increases, which typically occurs when significant news is reported about a company. A sharp increase in trading volume in a stock can be positive or negative. Investors who use technical analysis (see Chapter 5) analyze volume and daily prices for clues to future stock price movements.
Some investors like to know about upcoming events, such as earnings announcements, dividend payouts, or stock split announcements. For example, earnings announcement alerts remind you to review the fundamental performance of your holdings.
1 Free Alert Services
Before you can set up an alert or group of alerts, you must set up a portfolio at a site that offers an alert service. Fortunately, the best free alert services are available from the following popular web sites, so there's a good chance that you already have a portfolio [Hack #73] set up with one of them. If you don't, you can navigate to the following web pages to create one:
Yahoo! Finance (http://finance.yahoo.com)
Quicken.com's alert service provides the easiest interface of the three and offers a wide variety of alerts. However, Quicken.com won't email individual alerts during the trading day—instead, they email your entire portfolio, which includes any alerts you've set at the end of the trading day. To set up alerts at Quicken.com, complete the following steps:
If you haven't done so already, create a portfolio at Quicken.com [Hack #73].
On the Portfolio web page, click the My Alerts link at the top of the page.
On the My Alerts web page, click the Customize My Alerts link at the top of the page.
Specify the alerts you want from the following options:
Price Change Exceeds: specify a percentage change. You can specify one percentage for all stocks or specify different percentages for each stock in your portfolio.
Volume Exceed Average By: specify a percentage change. You can specify one percentage for all stocks or specify different percentages for each stock in your portfolio.
Price Drops Below: specify the price at which you want to be notified for each stock. Although price drops are often overreactions to bad news, it's important to check that price drops aren't due to undesirable fundamental changes in a company's situation.
Price Rises Above: specify the price at which you want to be notified for each stock. This type of alert is useful for watching a target sell price.
Alerts set to specific stock prices require some maintenance. You must adjust price alerts if a stock splits. In addition, if the stock price increases or decreases significantly over time, you must adjust the price alerts accordingly. Otherwise, you might receive an alert because a stock priced at $110 increased to $111, which happens frequently.
Section 2 Announcements: check the checkboxes in this section to receive notification for dividend payouts, stock splits, earnings announcements, analyst upgrades or downgrades, or the announcement of expected earnings.
Section 3 Overall Account Value: you can specify the Drops Below price, the Rises Above price, or an intra-day percentage change for your entire portfolio.
To receive alerts about companies you want to watch but don't yet own, create a separate portfolio of those stocks you. Keeping watch-list stocks separate means that the portfolio statistics for your real portfolio reflect its performance.
Click Finished to save your alerts.
To set up delivery of your portfolio with alerts for the end of the trading day, click E-mail my Portfolio. Confirm that the email address displayed is the one to which you want your portfolio sent, and click Sign Me Up!
With a portfolio open at MSN Money you can click the Summary Alerts link to set up price alerts using dollars or percentages, and to specify a volume alert for all the stocks and funds in your portfolio. To create alerts for a specific stock, type its ticker symbol in the Symbol box and define the alerts you want. You can specify one or two times during the day to receive alerts—you aren't notified immediately when a stock hits the alert price, percentage, or volume. You must also specify the number of shares for a volume alert, which means you must dig to identify the average daily volume for your companies. In addition, you can checkboxes to set up alerts for the following events:
- Analyst upgrade or downgrade
- Featured on CNBC
- Stocks in Play from Briefing.com
- Morningstar Mutual Funds upgrade or downgrade
- Positive or negative earnings surprise
- Reuters Research alert
- Stock split announcement
Alerts on the Go
Stay in touch with your portfolio when you're on the go by using services that work with cell phones, PDAs, pagers, and other wireless devices. Yahoo! Finance enables you to obtain stock price alerts at specific times of the day via your cell phone or alphanumeric pager. Go to http://mobile.yahoo.com/wireless/alert. With a subscription to AvantGo (http://www.avantgo.com), which is free, you can receive portfolio and business news from My Yahoo!, the Wall Street Journal Online, and other sites, delivered to your PDA. AvantGo also provides an updated list of wireless hot spots at http://avantgo.jiwire.com. MSN Mobile delivers alerts once or twice a day to cell phone subscribers. Find out if this is available to you by visiting http://mobile.msn.com/signup/Signup2.aspx.
Yahoo! Finance has a very basic alert service for dollar and percentage price increases and declines. If your stock triggers an alert, you'll be notified by email. Although Yahoo! Finance doesn't offer as many types of alerts, choose Yahoo! Finance's alerts to know immediately when a stock price hits its target.
2 Alerts for a Fee
Morningstar's Portfolio Manager (http://www.morningstar.com) offers an outstanding alert system that belongs to their Premium Membership features [Hack #67] and [Hack #77]. If you're interested in several of the premium features, the cost ($12.95 per month, $119 per year, and $199 for two years) might be acceptable to you. You can use a 14-day free trial offer to explore the site and the alerts before you pull out your credit card.
Unlike the free sites, Morningstar offers numerous separate alerts for stocks and funds. Fund investors typically receive short shrift when it comes to alerts, but you might get dizzy at all the fund alerts that Morningstar offers. Figure summarizes the vast array of alerts for stocks, funds, and your overall portfolio.
General alerts for stocks
Morningstar-analysis stock alerts
General alerts for funds
Morningstar-analysis fund alerts
Price up/down more than 10%
Price up/down 5% or more on heavy volume
Volume more than twice 30-day average
New 52-week high
New 52-week low
Daily news articles
Stock dividend distribution
Change in this year's or next year's EPS estimate
Reported EPS beats/misses estimates for 2nd straight quarter
Above or below average quarterly revenue growth
Change in Stock Grade for Profitability, Financial Health and Growth
New Analyst Report, Stock Star Rating or Stock Fair Value Estimate
Daily news articles
Capital gains distribution
Fund opens/closes to new investments
Expense ratio change
1- and 3-month return top or bottom 10% of category
Change in Fund Star Rating
Change in Style Box
Change in Morningstar Category