Investing in the stock market through the Internet just got a bit easier for the amateur investor thanks to the efforts of a professor at California State University, Long Beach. Thomas Rhee, a finance professor, has developed a software system that takes some of the guesswork out of playing the stock market. And, he is giving access to the system away for free.
The system, known as Tara Portfolio Solutions (TPS), is based on a set of mathematical algorithms taken from the Nobel Prize-winning Modern Portfolio Theory (MPT) in finance, which Rhee says teaches investors how to select portfolios rather than individual stocks.
The Cal State Long Beach professor calls the program a "powerful financial and analytical tool." It manages and gives advice on stock market investments based on an individual investor's answers to a series of questions. In the final analysis, it gives amateur investors more of a "scientific approach" to investing their money.
Just recently, Rhee began offering access to TPS free to individual investors and professional fund managers through a web site at www.tarausa.com.
"The goal of Tara Portfolio Solutions is to minimize investment risk and maximize the return by using mathematical statistics," explained Rhee, who has been teaching investment in finance for about 20 years. "There are large investment houses that have their own systems based on MPT, but they are very proprietary of these programs.
"My contribution here is to make this type of program available to the regular Joe on the street so that anybody with Internet access can use the system," he added. "It gives me an opportunity to take university education materials into the real world for other people to benefit,"
Rhee originally developed his mathematical model to manage stock portfolios back in 1981, but the slowness of computers at that time hindered implementation of the model. Today, though, things are different. Advances in computing speed on personal computers have enabled him to introduce his model.
Rhee's system is not unproven. In fact, two Korean companies have hired him to install the system using Korean data/information. Hyundai Securities has been using the system since September 1999, and Rhee said company officials are very pleased with what it is doing for them. He is also currently installing the system for CJ Investment Trust and Securities.
To use the system, investors would need to answer a series of questions covering the length of time for their investment, the amount of money they want to invest, the minimum target return they expect and the investment style or stock preference they desire. They also need to decide on a trading strategy: beating the market or making money no matter how large or small.
After completing the questions, the user invokes the TPS engine to run the mathematical algorithm, and the engine gives the person the best investment solution according to the answers to those questions. Additionally, the engine runs at a regular time interval, values individual portfolios based on a real-time basis, and allows the investor to change or redeem investments automatically.
"With Tara Portfolio Solutions, I want to show that what we do at the university can be made useful for the individual investor," Rhee said. "The system is perfect for those who do short-term day-trading or are dealing with retirement investments."
EDITORIAL NOTE: To set up an interview with Dr. Rhee and a demonstration of the TPS program/software, contact Rick Gloady, director of media relations at CSULB, at 562/985-5454. Dr. Rhee is currently in Korea but will return the week of May 15-19.
Public Affairs Offices/Campus News