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June 10, 2011 6:29 pm

Computer says ‘no, not really’

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Napoleon Hill said that money was something more than just paper bills: money was an idea. My struggle to manage my portfolio during recent weeks backs this up.

For about a month from mid-April to mid-May, the broker holding my Trading Isa – TD Waterhouse – was plagued by a technical problem. Something had gone wrong with the electronic price feeds: instead of the published closing price, equity listings reflected after-hours fluctuations – which, especially where some of the more volatile stocks were concerned, proved to be quite substantial.

Day after day, the closing prices on television and the internet differed from those quoted on the broker’s site – sometimes by as much as 35 per cent. Customers’ total portfolio values are added up once a day after hours, so my account, computed on the basis of incorrect price feeds, showed a figure that was thousands of pounds lower than I thought it ought to be.

Comparing the published closing prices and the broker’s listings on May 8, for example, showed Lamprell (LAM) at 348p versus 310p (a difference of 11 per cent). Polo Resources (POL), stood at 5.75p versus 4.50p (a whopping 22 per cent). United Utilities (UU) appeared as 623p versus 535p (about 14 per cent). For more on why I hold these stocks, see my column on July 9.

When I called to flag up the problem, the customer service team said it was a “non issue” and reassured me that the price feed was fully correct during opening hours. It was not the reassurance I needed. As a working person, it is difficult for me to monitor prices during the day. Like others in my situation, I have created a routine where I monitor and plan my portfolio moves outside market hours. It was precisely during these hours that the information in my portfolio on the provider’s site was wrong.

Over several weeks, the (reputable) broker’s information was not reliable on any single day. Something was seriously wrong – and I was not the only one affected. An
e-mail response to the complaint I had made online addressed me as “Dear Mr Snowdon”. This was followed by a second message seconds later, apologising for “misspelling” my name. Apparently, inundated by complaints from worried clients, the broker had embarked on crisis management by sending standard (yet customised) calming answers.

So how could I know what the real value of my stockholdings was? As an ordinary retail investor, my standard source of information is the google.co.uk/finance site where I have listed the stocks I own in a “my portfolio” tool for easy monitoring. Others use Yahoo, Reuters, Bloomberg, or some other online source. But how reliable are these sources? I have seen some weird price fluctuations on Google from time to time, especially on weekends. In today’s world, which is dominated by virtual bookkeeping and over-reliance on electronic records, real value is difficult to pin down. How do we know what we own? Is money just an idea?

I would have much preferred to see some clear communication from my broker on the issue. Knowing that total portfolio values were incorrect when calculated through the standard after-hours method, they could have proactively offered some alternative to justifiably anxious clients. I am now shopping around for an alternative provider.

Dina Iordanova is an active private investor, writing about her own investments. She may have a financial interest in any of the companies, securities and trading strategies mentioned.

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