If time is your enemy,
but profits are your friend, Monocle is the answer to your prayers.
Turn your computer into a mutual fund goldmine! So goes the catch
line on Monocle Systems
About three years ago, Tony Sagami, founder of Monocle Systems, gave
a lively presentation to the APCO Financial SIG. Several of us took him
up on his great user group pricing and bought the software and subscribed
to the data service. Due to the group interest in mutual funds, a Monocle
Mutual Fund SIG was organized.. Walt McGinnis and myself are co-chairs.
Monocle is a mutual fund analytical software program for Windows. It
is one of the easier to use financial analytical programs available. It
includes automated trading systems show you what the optimal move is following
your personalized trading program. The mutual fund’s daily net asset value
is downloaded off the internet.
The Monocle database is organized as a spreadsheet, with the names of
the funds down the left-hand column. Adjacent columns display values such
as one-year returns, three-year returns, beta, alpha, Sharpe ratio, Treynor
statistics, and so on. The statistics are of three types: reward, risk,
and both-that is, risk-adjusted rewards.
Reward statistics include historic fund returns, both absolute and as
measured against benchmark indexes such as Nasdaq or the S&P 500. Risk
measures assess fund volatility and how closely the fund follows the moves
of the market. These measures are mathematically sophisticated, but the
software uses plain language. The "ulcer" index, for example, is a measure
of the irritation you might experience in waiting out the deep valleys
in a fund's performance. A historic record of a fund's "drawdown" shows
you the greatest percentage loss in a fund over a stipulated period of
time. It is a worst-case scenario that immediately makes sense to novices
learning the program.
In Monocle, fund-trading decisions are driven by technical timing tools
long familiar to stock traders: moving average crossovers, trend line penetrations,
and swings of relative strength. The charting package will display these
indicators; charts can be marked with arrows to indicate buy and sell points.
The dynamic allocation module will back-test trading strategies to see
how well they would have fared in the past.
Back testing is common in stock-trading software. But this program differs
from stock-trading programs in two important respects. It tests not only
single trading vehicles but also portfolios of mutual funds. And it takes
into account the rules you need to follow to minimize your transaction
costs. For example, there may be a requirement to stick with a newly purchased
fund for 30 days. Monocle takes these rules into account in testing trading
systems, so you don't come up with a strategy you cannot use in the real
world. If you need help getting started on strategies, the program comes
with an example of a trading system.
Monocle II is fast and intuitive. The manual is helpful. The program
itself is essentially a short course in fund evaluation and trading. The
program's purpose is to help you stay invested in the winning funds while
they are winning, and then switch funds to keep on winning. The program
cannot make these judgment calls — you must. But it can provide the tools
you need to do what is necessary: identify a sleeper, beat the market,
and avoid that inevitable day of doom.
One of the strongest investment strategies is Sector Rotation. This
strategy shifts investment into the area of the market now performing the
best. We say over the last year and half that techs had a very strong run
up and run down. By being flexible and moving with the market, Monocle
users try to be in the right place at the right time. If well executed,
one can capture most the upside and miss most of the downside. The difficulty
of this strategy is it takes some powerful tools, like Monocle and a daily
dedication to monitoring and executing on one’s system. Getting familiar
with Monocle can be done in a couple of weeks. Really knowing the program
is a much longer process and something all our SIG members are still learning.
Monocle Pricing Info: A $15, 30-day trial is available. This includes
software, manual and shipping. Monocle II for Windows CD (Windows 95/98/2000/NT)
is normally $500 (one-time charge). Tony Sagami has offered APCO members
one-half off the normal charge.
Users will also need to subscribe to Monocle’s daily data service for
$75/quarterly or $240/yearly
Like all the latest and greatest software, the more system power and
faster Internet connection, the better one's results. Does anyone who is
serious about managing their money, and using sophisticated software and
extensive daily download have a system older than three years?
If you’re interested, please be our guest at an upcoming APCO Monocle
SIG. We meet on the first Wednesday of each month at 7 PM in the
APCO Central Park mall Resource Center.