Can You Trust Your Charting Program?

Eke!!! That was the cry I heard last Friday afternoon from Fifi, my ex-Wall Street analyst turned domestic dominatrix. Not only does she rule over my household but she also has the task of shoring up my stock portfolios at the end of the day. Not that I expect her to do it--she just enjoys it. I think it's her way of keeping up with the market and giving me a little break. (She does have her soft moments but she'll never admit to them.)

From the sound of her cry you would have thought she was being attacked by a fifty foot rodent with a taste for French tarts, but it was something more sinister than that. She found major discrepancies in the end-of-day stock prices as quoted from my real-time charting program compared with what my online portfolio management program reported. She also found that what was given as the last trade on a real-time chart wasn't what was reported as the final trade in the corresponding quote sheet where real-time profits and losses are calculated. I'll outline one actual example that should give you a clearer picture of what I'm talking about.

As my faithful readers already know, last week I constructed two portfolios--one to track stocks that reported earnings on good news (a long portfolio) and the other to track those that reported earnings on bad news (a short portfolio). Comparing end-of-day data, Fifi found discrepancies among four of the five stocks in the good earnings portfolio. Hurco (HURC) in particular showed a major discrepancy. My charting program gave the last quote in its quote sheet as $47.90 while the portfolio management program gave $44.22, over an 8% discrepancy! Looking at the last trade of HURC on the chart, I saw that it was $44.38, certainly a lot closer to $44.22, but not even close to the quote sheet price. What went wrong and who was right?

First I called the portfolio management software company. They said they receive their end-of-day data from a large brokerage firm. Checking with two other independent data sources (one being Yahoo! finance), they were able to confirm their numbers. Whew! At least I have confidence that my portfolio profit and loss numbers are being calculated correctly. Then I called my data service provider. They admitted the discrepancy between the quote sheet and the final trade on the chart and said "they would look into it." As to why their end-of-day data doesn't jibe with everyone elses's, they said that I wasn't running the latest version of their software (which just came out and which Dimitri forgot to install), so that could be the problem. I'll know for sure tomorrow when I compare the two software versions.

I really hope my data provider resolves the problem between the chart and the quote sheet values because errors of this sort can have consequences as to what course of action one should take. In the case of HURC, the loss should have been 8.2% as opposed to the 0.5% loss given in the quote sheet. If I were an investor operating with tight stop/loss triggers and had I seen the correct number, I might have entered a sell order at today's market open which would have spared me another 7% loss today.

Bottom Line: What does this seemingly trivial error mean to you? It means that even software that has been around for many years and used by perhaps hundreds of thousands of users can still have errors--errors that could potentially be detrimental to the value of your portfolio. Although it's a pain in the keister, you might want to periodically check the price of your holdings against an outside data source, especially if you're trading intraday.

Earnings Portfolios Update: Today our Good News portfolio is down 4.5% since Thursday with Hurco being the biggest loser, dropping a total of 13%. The Bad News Bears are triumphing with a 17% overall gain. ABH and RHD have been dropping faster than Jimmy Hoffa's body in the East River, gaining a total of more than 28% and 34% respectively.

I just hope I can trust these numbers!