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									     Feature                               Product Review: VectorVest RealTime
                                                                                             By Wayne A. Thorp, CFA



 F    or many years, VectorVest has
      been a mainstay of short-term
traders and market timers alike. The
                                        window consists of several tabs and
                                        opens on the Home tab, which is
                                        shown in Figure 1. This is the default
                                                                                 traded stocks, 60 market indexes,
                                                                                 226 industry groups and 41 sectors.
                                                                                 The stock universe, for the most part,
program has built a loyal following     layout of the Home tab. However,         is comprehensive, although I did
with its unique combination of buy/     you can customize it to your liking      run across a few ADRs (American
sell recommendations and proprietary    by choosing from a variety of “gad-      depositary receipts) that were not
market timing data on an end-of-day     gets”—mini windows displaying spe-       tracked by the program.
basis. Recently, VectorVest took this   cific data that can be moved within        Intraday pricing is available for the
analysis to a new level with the re-    the Home tab or detached from the        last five trading days, while end-of-
lease of VectorVest RealTime, which     program window and moved else-           day data goes back more than 10
offers the market features users have   where, such as to another monitor.       years when applicable.
come to rely on, along with search,     Even the gadgets themselves are            You can export price data, along
sort, ranking, system testing,                                                             with a range of fundamental
and portfolio management                                                                   and technical data elements
functionality—now updated        “VectorVest RealTime offers                               into a spreadsheet. The only
continuously throughout the                                                                data you cannot export are
trading day.
                                 the market features users                                 VectorVest proprietary com-
                                                                                           ponents.
Download & Go
  After signing up for real-     have come to rely on, along                              Ranking & Market
time service—there is a 30-                                                               Timing
day trial available for $29—
you download the program
                                 with search, sort, ranking,                                 VectorVest utilizes a
                                                                                           bottom-up analysis approach
from the VectorVest Web site.                                                              to arrive at a value for each
Installation is very straightfor-system testing, and portfolio                             of the stocks in the database.
ward and within minutes you                                                                From there, the program
are up and running. If you
are not good at memorizing
                                 management functionality                                  measures the stock’s value,
                                                                                           safety, and timing. Rela-
log-in names and passwords,                                                                tive value (RV) measures a
make sure you keep this          —now updated continuously                                 stock’s long-term price ap-
information handy, as you are                                                              preciation potential; relative
prompted for it every time
you open the program.
                                 throughout the trading day.”                              safety (RS) measures the
                                                                                           predictability of a company’s
  One thing I did notice                                                                   financial performance; and
immediately was that the program        customizable so you can alter their      relative time (RT) projects the short-
appears to be a bit of a resource       size, color, and amount of data they     term price performance of a stock. A
hog. On my Dell XPS 420 Windows         display.                                 weighted vector sum of these three
XP system with 3.25G RAM and an           Also on the Home tab you will          variables is used to arrive at the
Intel Core Duo processor running at     find the Dashboard, which consists       VST (value, safety, timing) measure.
3.16GHz and connected to a T-1 line,    of three gadgets of your choosing.       Stocks with the highest VST have the
I noticed a severe slowdown once I      Unlike the other gadgets on the          best combination of value, safety, and
connected to the real-time data feed.   Home tab, however, the Dashboard         timing. Based on its VST and price
Web browsing slowed to a crawl and      is visible on all of the tabs within     movement over the last 13 weeks, a
opening additional programs magni-      VectorVest RealTime. This allows         stock is then assigned a buy, hold, or
fied the problem. Luckily, you have     you to specify the data and informa-     sell recommendation.
the option of turning off the data      tion you feel is most important so it       Beyond providing you with an
feed, which frees up system resources   is readily accessible. To free up more   indication of the strongest stocks,
should you need them.                   real estate, you can also minimize the   sectors, and industries, VectorVest
                                        Dashboard.                               RealTime provides data regarding
Navigation                                                                       the overall direction of the market
  Once you have VectorVest Real-        Universe & Data                          to ensure you are investing with the
Time up and running, you will find it     The VectorVest RealTime database       trend and not against it. Figure 2
very easy to navigate. The program      consists of approximately 8,000 U.S-     illustrates several of these market


16                                                                                               Computerized Investing
timing indicators as of mid-day on
August 28, 2009.                              Figure 1. VectorVest Home Page
  The market timing indicator (MTI)
is based on several values, including
the relative timing (RT) vector men-
tioned earlier, as well as the Vector-
Vest Composite (VVC) and buy/sell
ratio (BSR). The VVC is a price-
weighted average of the prices of all
stocks in the database. This offers
a more comprehensive view of the
market than the Dow Jones industrial
average or the S&P 500. Further-
more, unlike most market indexes
that are market-cap-weighted, the
VVC is less easily influenced by large
stocks. The buy/sell ratio (BSR) is a
measure of all buy recommendations
compared to sell recommendations
on the stocks in the database. The
MTI identifies the underlying market
trend as well as the trend’s strength
and momentum. Traders find it useful          Figure 2. VectorVest Market Timing Indicators
for identifying market turning points.
  The Market Timing Gauge pro-
vides a current reading of the market
trend while the Color Guard pro-
vides an indication of the direction
and strength of the overall market
by tracking the changes in the VVC,
RT, BSR and a recent history of the
changes in these timing indicators. In
actuality, the Color Guard portrays
three trends. This first is the short-
term trend or primary wave, which
is based on the price movement of
the VVC. The intermediate trend is
determined by the value of the MTI.
The Trend column on the Color
Guard indicates the primary and
intermediate trends using either up
or dn (down). Lastly, the confirmed
trend is a long-term indicator based
on two consecutive week-over-week         most of which update in real time          and a price graph.
up or down moves by the VVC and           throughout the trading day. The data         From the Viewer tab you can sort
confirmed by the value of the BSR.        is primarily fundamental in nature.        industries and sectors to identify
                                          You can create your own data fields,       the strongest sectors, the strongest
Viewers                                   which you can use for sorting or           industries within those sectors, and
  If you are looking for trading ideas,   searching, but they are tied to the        finally the strongest stocks within
the Stock Viewer is the easiest way to    data fields available in the program.      those industries. Clicking on a sec-
see those stocks with the highest VST       A nice feature of the sort function      tor provides a list of the industries
ratings. Remember, however, that it       is the ability to specify primary and      within that sector. From there, you
is a good idea to consider the overall    secondary sorting criteria. Also, by       can select individual industries to see
market trend before placing trades.       right-clicking on any stock on the         the underlying stocks. In addition,
  The Stock Viewer display provides       Viewer tab you can access VectorVest       there are Viewers for market indexes
over 100 pieces of sortable data,         analysis reports, historical price data,   and exchange-traded funds (ETFs).


Fourth Quarter 2009                                                                                                      17
 Feature

                                                                                 ate new ones.
 Figure 3. The VST Mighty Mites Predefined Search
                                                                                 Testing
                                                                                   Before putting real money into any
                                                                                 type of strategy, it is useful to have an
                                                                                 idea of how it has performed in the
                                                                                 past. VectorVest RealTime claims to
                                                                                 offer backtesting capabilities. How-
                                                                                 ever, this is a bit misleading. The
                                                                                 program allows you to run Quick-
                                                                                 Tests on all or some of the stocks
                                                                                 passing a search to see the number of
                                                                                 winning or losing stocks, the percent-
                                                                                 age gain or loss for the stock and the
                                                                                 annualized performance. You can
                                                                                 even specify the start and end date
                                                                                 of the tests using end-of-day data, or
                                                                                 specify the time to test intraday over
                                                                                 the last five trading days. However,
                                                                                 you cannot create a custom trading
 Figure 4. Performance of a Sample Portfolio                                     strategy with specific entry and exit
                                                                                 points and test its performance.

                                                                                 Portfolios
                                                                                   You have two options for creating
                                                                                 portfolios in VectorVest RealTime.
                                                                                 The first is QuickFolios, which are
                                                                                 instant portfolios of stocks from a
                                                                                 Viewer or Unisearch. You can manu-
                                                                                 ally select the stocks from a listing
                                                                                 or select the top stocks based on
                                                                                 whatever ranking you are using.
                                                                                   The Portfolios tab offers more
                                                                                 robust portfolio capabilities. As
                                                                                 with a QuickFolio, you can create a
                                                                                 portfolio manually or by selecting the
                                                                                 results of a search. Creating portfo-
                                                                                 lios from searches allows you to track
                                                                                 their performance going forward.
  VectorVest RealTime contains          Clicking on an individual search         You can set up portfolio “automa-
several predefined WatchLists, which    will give you a brief overview of the    tion,” where you receive alerts and/or
you access from the Viewers tab.        search as well as the criteria used.     close positions once a certain stop-
These watchlists cover indexes, ETFs,   Figure 3 displays the VST Mighty         loss criterion has been met. You can
industries, and sectors. You can also   Mites search criteria and intraday       even instruct the program to replace
create your own watchlists manually     results as of August 28, 2009. This      closed positions with stocks using
or using the results of a search.       search is designed to find low-priced    any of the available searches. Howev-
                                        stocks with high growth-to-price-        er, if you wish to follow your portfo-
Unisearch                               earnings ratios and high VST values.     lio strategy, you will need to manually
  On the Unisearch tab, there are         If I had wanted to, I could have run   place your trades with a broker.
over 300 predefined market searches.    this search on any exact time over         Figure 4 illustrates the performance
You can find searches to match          the last five trading days or based      of a portfolio I created using the
specific market conditions or your      on end-of-day data going back to         Marathon Unisearch with data as
trading behavior (conservative to ag-   June 1995. There are also searches       of the close on October 11, 2007. I
gressive). Searches are designated as   for ETFs (and inverse ETFs) as well      had expected the program to test the
long or short by up or down arrows,     as sectors or industries. Users can      stop-loss and replacement parameters
respectively, in front of their name.   modify predefined searches and cre-      I set for the portfolio automation


18                                                                                               Computerized Investing
                                                                                                          Feature

from October 11, 2007, through the        in-depth technical analysis with          with tips on using the program
close on August 27, 2009. However,        VectorVest, you will be disappointed.     and can access free on-line training
the program merely looked at the          The program offers very few techni-       classes. Luckily, the program is very
data as of August 27, 2009. No true       cal indicators. For more advanced         easy to use.
backtesting took place; changes will      technical analysis and charting and
only take place going forward. I had      searching, you will need to purchase      Final Thoughts
expected that the program would           the ProTrader add-on for an addi-           VectorVest has successfully navi-
have tested the portfolio for every       tional one-time fee of $495.              gated the marketplace by offering buy
day between October 11, 2007, and                                                   and sell recommendations and unique
August 27, 2009. I suspect that most      VectorVest Views                          market timing analytics. Historically,
other people experienced with system        The Views section of the program        users had to wait until the end of the
trading software would feel the same      is a daily newsletter and serves as an    trading day to update their analysis.
letdown.                                  excellent place to gain an understand-    With this new real-time offering,
  VectorVest RealTime produces            ing of where the market is headed         users can monitor the market minute-
several portfolio reports—a transac-      and how you may be able to capital-       by-minute, run searches for a variety
tion log, current holdings, summary       ize on those movements. Monday            of market conditions and trading
report, and a tax report.                 through Friday, there is a brief synop-   styles, and track them throughout the
                                          sis of the changes in each of Vector-     trading day.
Charting                                  Vest’s market timing indicators and a       That being said, VectorVest Real-
   For charting, VectorVest offers        summary of what they mean for the         Time is targeted toward a select
easy-to-read candlestick charts. Those    overall market trend. Lastly, there is    group of investors, specifically short-
who are unfamiliar with candlesticks      the strategy section which discusses      term traders. Furthermore, it is not
may find these a bit confusing. The       trading strategies for prudent or         designed for traders looking to test
charts use open-high-low-close data:      aggressive investors as well as what      their own strategies or for those look-
Green candles indicate that the cur-      steps are being taken in VectorVest’s     ing for high-level technical analysis.
rent closing price is higher than the     Yellow Brick Road model portfolio.        Also, at $129 a month or $1,395
previous closing price, whereas red         Each Friday there is also an essay      a year (for non-professionals), the
indicates a closing price below the       from Dr. Bart DiLiddo, founder of         program is priced only for serious
previous close. However, the candles      VectorVest. He shares his insights        traders. However, if you are an active
can also be filled in or left hollow to   into what is taking place in the mar-     trader looking for a more directed ap-
illustrate the relationship between       ket as well as tips and strategies for    proach, VectorVest RealTime stands
the open and closing price—a hollow       using the program.                        as a unique idea engine.
candle means the closing price is           On a weekly basis, the Views area
higher than the open and a filled-in      also highlights a “strategy of the
                                                                                     VectorVest RealTime
candle indicates the closing price        week,” which is one of the pre-built
                                                                                     VectorVest Inc.
is lower than the open. Therefore,        Unisearches in the program. This is
                                                                                     20472 Chartwell Center Drive
a green filled-in candle represents       a good way to learn more about the
                                                                                     Suite D
a period where the current closing        strategies in the program.
                                                                                     Cornelius, NC 28031
price is above the previous close, but
                                                                                     (888) 658-7638
is lower than the opening price.          Support                                    www.vectorvest.com
   You can create charts with up to         VectorVest provides a wealth of          sales@vectorvest.com
five days of intraday data or with        resources to help new users get the
over 10 years of end-of-day data. You     most from the program. There are           Price: $129/mo., or $1,395/yr.;
can add any of the 100+ data vari-        video tutorials providing an overview      30-day trial, $29
ables in the program to a chart and       of the key components of the pro-
draw custom trendlines.                   gram and an in-depth Help System.          System Requirements: Windows
   If you are expecting to perform        You also receive periodic E-mails          XP Service Pack 2 or higher; 1G
                                                                                     memory; 500M free hard-disk
       Wayne A. Thorp is editor of Computerized Investing and AAII’s                 space; high-speed Internet con-
                                                                                     nection
  financial analyst.




Fourth Quarter 2009                                                                                                     19

								
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