Computer Chronicles Revisited 114 — The Fundamental Investor, Value/Screen Plus, CompuTrac/PC, and MetaStock Professional

Tim Slater, a guest in our next Computer Chronicles episode from June 1988, gave an interview in 2022 to The Sunny Harris Show! with Samuel K. Tennis podcast about his career promoting the concept of technical analysis as an investment strategy. In brief, technical analysis is where you base investment decisions on the performance of a stock over time–i.e., its price fluctuations and volume of shares traded–without assessing the underlying merits of the company. As Slater explained to Sunny Harris, his mentor in technical analysis didn’t even know the names of the companies he analyzed. His staff simply brought him the charts of the company’s stock performance without any identifying information.

If that sounds ridiculous, you might consider an alternative strategy known as fundamental analysis, which looks at the intrinsic value of a company by examining financial statements, the quality of the management, overall economic conditions, and other factors. Fundamental analysis is commonly used by investors when looking to build a long-term stock portfolio, while technical analysis is often favored by the short-term investor looking to turn a quick profit. Of course, this isn’t a binary choice, and many savvy investors use a combination of both technical and fundamental analysis in their decisionmaking.

Did “Black Monday” Sour Investors on PCs?

So how do computers–and specifically investment software–factor into all this? That’s the question this episode spent most of its time examining. As we’re wrapping up the fifth season of Computer Chronicles, Jan Lewis sat in as co-host for this episode and the next one.

Stewart Cheifet opened the program by showing Lewis a QuoTrek, which was featured in the previous Chronicles episode on investment software from February 1986. The QuoTrek was a handheld device that enabled users to receive real-time updates on their stocks through FM radio signals. To demonstrate, Cheifet entered the stock code for Apple Computer. The QuoTrek showed that Apple’s stock closed at $38.60 per share the previous trading day. (Chronicles taped on Saturday, so this would have been a Friday closing price.)

Cheifet noted that devices like the QuoTrek demonstrated how technology had increased the flow of information so quickly in the area of investments. When talking about computers and investors, however, many people were still thinking about the October 1987 stock market crash–aka “Black Monday”–which was blamed on computers. Could this be an area where computers were a bad thing rather than a good thing?

Lewis said that overall, computers were a good thing. They helped to spread the flow of information to more and more people–and in the stock market, information was what made you money. On the other hand, computers could also be programmed to automatically issue sell orders when certain conditions were met. That was essentially what led to the crash, i.e., multiple computers using the same formulas all issued sell orders at the same time. But the answer was not to stop technology but rather better regulation. Here, the stock markets themselves responded to the crash by limiting when investors could rely on program-based trading.

Investors Learned the Ins-and-Outs of Software

Wendy Woods presented her first remote segment from the Jeffers Computerized Investor Center in Pleasanton, California, just outside of San Francisco. Woods said that computer owners who would like to use their PC to help with their investments could get assistance from the Center. The Center helped individual investors to become more self-sufficient by teaching them how to use the same kind of software and database services that professionals used.

J. Terry Jeffers, the chairman of Jeffers Computerized Investor Corporation, told Woods that the changes in hardware and software that had taken place in the last three years or so had been dramatic. With what he called the new “third generation” of personal computers–presumably a reference to Intel 386-based machines–software had finally become as easy to use as the advertisements claimed.

At the Center’s classroom, Woods explained, charting historical trends and stock price movements (i.e., technical analysis) was central to the curriculum. For Macintosh users, the program of choice was The Wall Street Investor. IBM classes used an integrated package called The Active Investor.

Jeffers believed that investors who learned to master their computers were prepared for anything–even Black Monday. While he made no claim to being a prophet who knew exactly what was going to happen, Jeffers said it was clear that the person who had a computer and used the right software at least had a picture of what was happening. That gave them a warning. Whether they acted on that warning was another matter.

Woods reiterated that while the Center did not promise to teach “mystical” powers, it did offer computer users an edge in what could sometimes be a bumpy ride along Wall Street.

Fundamental Analysis: So Many Variables

John Dutra and Elizabeth Lieve joined Chefiet and Lewis for the next segment. Dutra was the vice president of Texas-based Savant Corporation. Lieve was a software services manager with New York-based Value Line, Inc.

Getting right to the point, Lewis asked Dutra to explain the differences between fundamental analysis and technical analysis. Dutra said technical analysis generally referred to stock prices and stock volumes, i.e., the history of a stock price over time. Fundamental analysis referred to just about everything else–how much money did the company make, how much did it have in the bank, how much did it spend on research and development, and so forth.

Cheifet then asked Dutra to demonstrate his company’s product, The Fundamental Investor, which was part of a series of investment programs published by Savant. Dutra began by showing the main menu, which was organized like a flowchart. The fundamental analysis component included separate sections labeled “Data,” “Analysis,” and “Catalog.” The “Catalog” section managed the data sources. Dutra said the software supported a number of popular on-line investment databases, including those from Disclosure, Inc., Standard and Poor’s, and Ford Investor Services, Inc.

Altogether, there was about 700 pieces of information in the software, and the user could add their own additional sources, including data and even equations. For example, Dutra said you could add a specific equation to calculate debt-adjusted price sales that was recently published in Forbes magazine, which he demonstrated.

Cheifet asked how an individual investor would actually use this software to make decisions. Dutra said you would go to the “Analyze” module. There, you could enter search criteria. For instance, he did a search for stocks where the latest price was greater than $5.00 and less than $25.00 per share. The program then displayed a bar graph of stocks fitting those parameters.

Cheifet asked about the data sources used to pull that information. Right now, Dutra said it was coming from data diskettes provided by Disclosure, Inc. But you could combine information from other data sources as well. To illustrate, he added a parameter to look for companies with both a price-earnings ratio and a dividend yield of 5. The software then displayed a list of 23 companies meeting those requirements. Dutra said information on those 23 companies could then be transferred via the software’s included communications module and updated on a daily basis.

Cheifet asked about the cost of Fundamental Investor. Dutra said the software itself cost $395. But the data was an additional cost. It might only be 10 or 15 cents if you downloaded just one piece of information. But if you purchased something like the entire Disclosure database of 12,000 companies, which came as a monthly subscription provided on diskettes, that would cost $1,400.

Turning to Lieve, Cheifet asked her about Value Line’s product, Value/Screen Plus, which was considered a more high-end product than Savant’s offerings. Lieve said Value/Screen was only offered as a subscription service, which cost between $211 and $1,500 per year. But that subscription included both the software and the data as well as any upgrades.

Cheifet asked how Value/Screen worked. Lieve said that unlike Fundamental Investor, which drew from multiple third-party data sources, Value/Screen only used data provided by Value Line. She noted that data was compiled by Value Line’s analysts, who had a proven track record of outperforming the market as a whole. The software itself was mainly a screening utility.

Demonstrating the software, Lieve explained there were 38 different variables. Cheifet emphasized that this was still fundamental analysis as opposed to technical analysis. Lieve then moved into her demo. She created a list of variables earlier for the software to search. These included looking for a stock with a recent price of under $50 per share; a “safety rank” of under 3; and a “timeliness rank” of under 2. Cheifet asked for an explanation of those ranks. Lieve said Value Line analysts ranked both categories on a scale of 1(best) to 5 (worst). A safety rank of 1 or 2 meant it was considered a safe investment, while a timeliness rank of 1 or 2 meant this was a good time to buy the stock.

Lieve then ran her search using the three criteria. It produced a report screen listing nine recommended stocks. The user could then pull up a ticker report on any of the listed companies. She did so, which displayed a list of all of the variables for that company. You could also use a separate function to create a combined report for all nine companies. That report was formatted as a table that could be downloaded to Lotus 1-2-3 or a similar spreadsheet program.

Cheifet turned back to Dutra and asked if this type of investment software actually leveled the playing field between individual investors and the “big guys.” Dutra said it helped an awful lot. There was still a gap between people who did this for a living versus individuals who used software to invest from home. But the software still made a big difference from the way things were 10 or 20 years ago.

Cheifet then asked if the person with better investment software really had an advantage over someone whose software wasn’t quite as good. Dutra said he thought so. Over the last few years, as more and more investors became involved with computer software, he found that his customers were using it because they had a friend who recommended it.

A Portfolio Management Intermission

Wendy Woods’ second and final remote segment focused on yet another area of investment software–portfolio management. Reporting from Montgomery Securities, a San Francisco-based investment bank, Woods said that for investors, time is money. Decisions had to be made daily if not hourly. And the problem was compounded when an investor owned dozens of stocks.

That’s where portfolio management software came in. At Montgomery Securities, a PC software packaged called Professional Portfolio from Advent Software tracked the performance of some 50 client portfolios. This was a job for the number-crunching skills of a computer. Each stock was updated daily and automatically through an interface to the company’s mainframe, with the profit-and-loss (P&L) calculated in the blink of an eye.

Beth Sereni, an administrative assistant with Montgomery, explained that if at the end of a day she tried to manually post all of the trades and calculate the P&L, for one account it would take her at least 30 minutes. Using Advent’s software, she could get the same information for 40 accounts in 3 minutes.

Woods noted that the daily P&L was the bottom line. But the software calculated each portfolio’s performance over time and issued full reports when needed. To be clear, Professional Portfolio was not for everyone. For one thing, it cost $5,000. For another, it required a certain level of experience. But for those with the money and the experience, it proved to be an invaluable tool that saved time and made money.

Technical Analysis: Looking at the Charts

The aforementioned Tim Slater, along with Curtis Carman, joined Cheifet and Lewis for the final studio segment, which focused on software for technical analysis. Slater was vice president of marketing with CompuTrac Inc., a division of New Orelans-based Telerate Systems, Inc. Carman was director of sales with Equis International.

Lewis opened by asking Slater to explain technical analysis and whether it was better than fundamental analysis. Slater said no, both forms of analysis were good tools, and most serious investors should be both a “fundamentalist” and a “technician.” The technical approach was the study of price data only. The technician believed that everything known about a specific stock was built into that price structure.

Lewis interjected, asking if that meant all of the information from fundamental analysis was therefore reflected in the technical analysis. Slater said that was correct. He believed that an investor should study the fundamentals to know they were buying something of value–or selling something that was overvalued–and use technical analysis to determine the timing of their transaction.

Cheifet turned to Carman and asked him to demonstrate his company’s technical analysis product, MetaStock Professional. Carman opened the program, which displayed a list of various securities, including stocks, bonds, and mutual funds. For the demo, he selected Lotus Development Corporation. Using preprogrammed keyboard macros, Carman showed how MetaStock displayed information using multiple windows. (To be clear, this was not Microsoft Windows.) Essentially, MetaStock divided the screen into four windows, with each containing its own chart representing a different analysis of Lotus Development’s stock price data.

Carman then pulled up a new chart showing stock price data for Texaco on a single screen. From this screen, he drew “trend lines” to extrapolate the potential change in Texaco’s stock price over the next 30 days. Lewis asked if the average investor would actually understand how to use this sort of technical analysis tool. Carman said yes, the typical user could take advantage of the software’s built-in help system and 100-page manual to get a good feel for how things worked.

Continuing the demo, Carman pulled up IBM stock data and displayed it using a Gann grid, which was a new feature in MetaStock. He also showed other types of trend lines you could superimpose over the stock data. There were a couple of other features demonstrated, but to wrap this up, they all were different ways of trying to figure out where a stock price was trending over time.

Turning back to Slater, Cheifet asked how the approach he took with his product, CompuTrac/PC, differed from MetaStock Professional and the fundamental analysis packages demonstrated during the prior studio segment. Slater said technical analysis was more complex. A technician had to study their craft for about a year before really getting into it. However, there was still value in performing technical analysis from the first day. Like anything else, you were dealing with professional traders using technical analysis, so it benefited the investor to arm themselves with a tool like CompuTrac.

Slater then demonstrated CompuTrac. Like MetaStock, you could use keyboard macros with CompuTrac, which Slater did here. He pulled up a chart documenting the price of gold. Slater said the program pulled in 348 data points to create a chart and add pre-defined trend lines. He added that CompuTrac had the ability to store trend lines. In terms of reading the chart, he said this was a chart reflecting “indecision,” meaning you had higher highs and lower lows. Whichever way the price broke away from the trend lines would lead the technician to conclude that is where the market was moving. The longer the trend, the more powerful the move. (No, that didn’t make any sense to me either.)

Slater then added some additional lines to the chart reflecting what he called an Alpha-Beta study. He said that a question investors often faced was what to do when dealing with a “sideways choppy” market. This type of study could help alert you to when you were in those types of markets. Basically, it helped the investor decide when to hold or sell a stock. Finally, the software could graph the profitability of transactions made using the suggested analysis over the past year. Using optimization, the investor could also test different parameters to come up with the best strategy.

Cheifet noted that Slater had made a long hardcopy of CompuTrac’s analysis on printer paper. (Imagine a banner made in The Print Shop but for stock data.) The printout stacked the various studies one on top of another to make it easier for investors to review. It was also possible to print out longer charts going back as far as you had data. This printout was made on a dot-matrix printer, but Slater said CompuTrac also worked with laser printers.

Cheifet asked Carman about the price of MetaStock Professional. Carman said it cost $295. The software was compatible with 14 different stock price databases, which obviously carried additional costs. As for CompuTrac, Slater said it used the same databases as MetaStock.

Slater Parlayed Software Into Long Dow Jones Career

Tim Slater moved to New Orleans in 1957 after graduating from New York’s Cornell University and completing a service commitment to the United States Army. Slater recalled in his 2022 interview with Sunny Harris that he spent most of his spare time engaged in stock trading and eventually rented an office in downtown New Orleans so he could visit the local brokerages and access their Quotron machines.

In 1977, Slater purchased one of the newly released Apple II computers, hoping it would aid him in his technical analysis of stock prices. He wasn’t much of a programmer, however, so he ended up recruiting Jim Schmit, a former IBM systems engineer teaching at Loyola University in New Orleans, to develop the necessary software, which they called CompuTrac.

Slater never intended to market CompuTrac as a commercial product. His goal was simply to facilitate his own research and trading. But hiring Schmit and several other programmers proved to be expensive–about $60,000 in late 1970s money–so he decided to spread out the cost by selling the finished software package to a limited group of 30 “partners.”

Eventually, Slater decided to make the software available to anyone who wanted it. As he told Harris, there was nothing proprietary about CompuTrac. The underlying program relied on “public domain” formulas. It was simply faster for most people to use a computer to do the actual calculations. So he started sending out disks–and even cassette tapes–to anyone who wanted to try before CompuTrac before buying it.

Of course, public sales led to people asking Slater questions about how technical analysis itself worked. So in 1980, he launched the first Technical Analysis Group Seminar in New Orleans, which became an annual conference. About 16 or 17 people attended that first seminar, Slater recalled. And slowly but steady the CompuTrac business grew.

Now, we’re not talking about something on the scale of Lotus 1-2-3. Slater said that by 1985, there were about 3,500 total users of CompuTrac. The program was also still confined to the Apple II, as Schmit designed it to take advantage of that system’s particular graphics system.

However, by September 1985 Slater realized he faced increasing competition in the investment software market, so he decided to sell the business to Telerate, Inc. Back in 1981, Slater formed Computer Assisted Analysis, Inc., which in turn had two subsidiaries, Compu Trac, Inc., and Delta Digital Design, Inc. The latter was a company that Slater and Jim Schmit started to design and build dedicated workstations for the investment community.

Telerate was a distributor of real-time market data founded in 1969 by Neil Hirsch, then a 21-year-old clerk at Merrill Lynch. Within just a few years, Hirsch managed to burn through the money he’d borrowed to launch his fledgling business. In 1972, financial services firm Cantor Fitzgerald acquired a 25 percent stake in Telerate. Not only did Cantor Fitzgerald assume $500,000 in debt as part of the deal, Telerate now obtained access to Cantor’s lucrative business trading in United States Treasury securities. By the end of the 1970s, Cantor owned 77 percent of Telerate and entered into an alliance with the Associated Press and Dow Jones to sell financial information to overseas customers.

Over the next decade, Dow Jones moved from being Telerate’s partner to its new parent company. In November 1989, Dow Jones paid $515 million to acquire an additional 25 percent stake in Telerate, giving it 92 percent of the company. This meant that Dow Jones now also owned the Compu Trac business, which Tim Slater continued to run from New Orleans. By this point, CompuTrac had been rebranded TeleTrac and was now primarily sold for the IBM PC and compatibles, although the company continued to support the original Apple II version.

Slater later recalled that he went to Dow Jones management after the Telerate acquisition completed and offered to continue running his Technical Analysis Group seminars as a form of “advertising” for the company. In other words, Slater saw his role as the educational arm of Dow Jones rather than generating direct sales. Dow Jones apparently went for it, and Slater remained with the company–reorganized as Dow Jones Telerate in 1992–until 1998, when he hosted his final seminar in Las Vegas just before retiring. (As for the software, Dow Jones Telerate ended support for TeleTrac in 1994.) That same year, Dow Jones sold Telerate to Bridge Information Systems, Inc., which then renamed its new division Bridge Telerate.

Three years after that, in February 2001, Bridge Information Systems filed for bankruptcy. During the bankruptcy proceedings, MoneyLine Network acquired Bridge Telerate for $10 million, which renamed it to–you guessed it–MoneyLine Telerate. This final incarnation of Telerate lasted until 2005, when it was sold to Reuters and absorbed into its existing market data business.

Savant Software Found New Life in New Hampshire

John E. Dutra IV and Clifford Creel founded Savant Software, Inc., in 1982. Previously, Dutra was a manager at a Shell Chemicals plant in Baton Rouge, Louisiana. Creel was a former U.S. Navy submarine officer with a PhD in chemical physics from MIT who worked for another division of Shell based in Houston. (Dutra’s father, John E. Dutra III, was himself a retired U.S. Navy commander who captained five different vessels during his 27-year career.)

Houston was also the original home base for Savant. Dutra and Creel started out with a similar goal that of Tim Slater–to develop investment analysis software for the Apple II. In their case, however, Dutra and Creel wanted to create an integrated software package software that provided both technical and fundamental analysis. They soon realized that the Apple II was not the best platform for their ambitious goals, so they quickly pivoted to the IBM PC and never looked back.

Savant released the first version of its integrated software package, The Savant Investor Series, in 1983. It met with critical and commercial success. James C. Condon, writing a review for the New York Times, described Savant’s technical analysis component as “the Cadillac” of technical investing software.

In 1991, Dutra and Creel decided they’d had enough of the hot Texas summers and moved themselves–and their business–to Bedford, New Hampshire. The new Savant Software, Inc., released TopVest, the successor to the original Savant Investor Series package, the following year. Three years later, in 1994, Savant got out of the software publishing business and became a contract developer. Over the next decade or so, Savant developed proprietary software for the investment, trucking, and banking industries, among others.

Dutra and Creel dissolved Savant Software, Inc., in June 2008.

Value Line Overcomes Founding Family’s Scandals

In 1931, Arnold Berhnard lost his job at Moody’s Investors Service due to the onset of the Great Depression. The 30-year-old Bernhard was still a relative newcomer to the world of investing. The son of German and Romanian immigrants, Bernhard started his career as a drama critic for Time magazine before joining Moody’s as an analyst and account executive.

After Moody’s fired him, Bernhard founded Arnold Bernhard & Company, where he continued to handle some of his old customer accounts. In 1936, Bernhard published his first Value Line Ratings of Normal Value, an investment newsletter that rated 120 stocks based on simple equations that he’d developed. In 1946, Bernhard hired Samuel Eisenstadt, a statistician, who revamped the methodology for what was now called the Value Line Investment Survey by creating a single formula that could measure the relative performance of about 1,700 stocks. Nearly 20 years later, in 1965, Value Line introduced the 1-to-5 ratings system that Elizabeth Lieve discussed in this episode.

Value Line has faced a number of scandals over the years. In May 1971, a federal judge in New York issued an injunction as part of a settlement between Value Line and the United States Securities and Exchange Commission. The SEC alleged that in 1968 and 1969, Value Line and Arnold Bernhard personally “accepted fees in connection with the purchase of certain unregistered securities” by two of the company’s mutual funds without informing investors. The SEC also believed that Value Line analysts deliberately withheld information from the company’s subscribers and shareholders. Bernhard and Value Line accepted the injunction–basically agreeing not to commit any future violations of securities laws–without officially admitting the SEC’s allegations.

Three years later, in 1974, a series of civil lawsuits alleged a former Value Line editor accepted $15,000 in bribes from two brokers in exchange for writing favorable recommendations for certain stocks. Again, the company denied any wrongdoing, but Value Line reportedly spent about $500,000 to settle the lawsuits.

More recently, in 2009, the SEC again took legal action against Value Line. This time the alleged wrongdoer wasn’t Arnold Bernhard, who died in 1987, but his daughter and successor as Value Line’s CEO, Jean Bernhard Buttner. The SEC alleged that from 1986 to 2004, Value Line and Buttner “engaged in a fraudulent practice that misappropriated assets from the Value Line Family of Mutual Funds” by inflating brokerage commission payments. Essentially, Buttner had third-party brokers perform trades that only cost 1 or 2 cents apiece. But she had the brokers bill Value Line 4.88 cents per trade. Buttner then “rebated” a portion of this back to the brokers and kept the remainder. Altogether, the SEC said Buttner and a Value Line vice president defrauded their own mutual fund investors out of more than $24 million through the bogus commission scheme.

Like her father, Buttner did not formally admit the SEC’s charges. But she agreed to a settlement that required her to step down from the leadership of Value Line and barred her from serving as a director or officer of any other public company. She also agreed to pay a $1 million civil fine. Howard A. Brecher, the company’s chief legal officer, took over as chairman and CEO and remains in that position as of this writing in January 2025.

Indeed, despite its checkered history, Value Line remains in business today. The original Arnold Bernhard & Co. actually spun off most of its business assets into a separate publicly traded company–Value Line, Inc.–in 1982. Arnold Bernhard & Co. remains the main shareholder, however, controlling 91.63 percent of Value Line, Inc., stock as of the company’s most recent annual report to the SEC. The company’s main business unit is Value Line Publishing LLC, which continues to produce a series of investment newsletters as well as various digital services for investors. For the fiscal year ended April 30, 2024, Value Line reported net income (profit) of $14.6 million.

MetaStock Still Charting in the Mid-2020s

Steven B. Achelis founded Computer Asset Management in 1982, renaming the company Equis International in 1989. In what’s becoming a familiar pattern, Achelis started out developing investment software for the Apple II. Achelis later pivoted to the IBM PC, releasing the first version of MetaStock in 1985.

Over the next decade, MetaStock developed a solid customer base for a niche investment software product, with reportedly 40,000 users by 1995. In January 1996, Achelis decided to sell Equis International to Retuers after reportedly rejecting five previous offers for his company–including one from Reuters just a few months earlier.

Achelis told the Provo Daily Herald he finally decided to sell for two reasons. First, Reuters was a $4 billion company compared to his $5 million company. Second, Reuters was the largest provider of financial content in the world, which put them in a prime position to exploit the growing Internet. “Most companies don’t recognize how the Internet and personal computers will change, and are changing, how everything is done,” he told Herald columnist David Politis.

Equis International continued to operate under Reuters and release updated versions of MetaStock. In 2008, the United Kingdom-based Thomson Corporation purchased Reuters to create Thomson Reuters Corporation. In 2013, Thomson Reuters sold off the MetaStock software and related assets to Innovative Market Analysis, LLC, a new Utah-based company created by Scott R. Brown, which continues to do business to this day under the MetaStock name. In fact, MetaStock released the most recent version of its flagship program–MetaStock 19–in 2024.

Notes from the Random Access File