Method and apparatus for enabling individual or smaller investors or other to create and manage a portfolio of securities or other assets or liabilities on a cost effective basis

<u style="single">Background of the invention</u> The present invention broadly relates to methods and devices for electronically trading or investing in securities or other assets, rights or liabilities, such as commodities or futures. More specifically, the present invention relates to methods and devices for investing in securities or other assets, rights or liabilities by trading electronically over wired and wireless networks, eg via the Internet. Allows you to build and manage a complex and diversified portfolio of such securities or other assets, rights or liabilities at a reasonable cost.

Currently, relatively small investors generally have two options when it comes to investing in securities. First, they can acquire stocks or stock derivatives directly (eg buy 1000 shares of Microsoft or Microsoft options), and derivatives whose value derives from multiple securities (eg Dow Jones Industrial Average). Option) can be obtained directly. In this example of direct purchase (through brokerage), the investor is the actual holder of a particular security or derivative. (If an investor holds a derivative, the investor generally does not have an ownership stake in the underlying securities that determine the value of the derivative). Second, these investors may use intermediary investment instruments, such as a portfolio of stocks, such as trusts, corporations or other business instruments whose value derives from multiple other securities (eg, stocks including S &amp; P500). You can buy an equity in a trust that includes a portfolio of other shares (the equity can itself be a security). The second category of this intermediary product, in principle, consists of open-ended mutual funds that invest in other securities (eg Fidelity, Vanguard, Scudder and other mutual funds). However, it also includes closed-end mutual funds, unit trusts and other means of investment, and is collectively referred to herein as a "fund." In this second case of investing through an intermediary investment instrument, the investor holds an equity interest in that investment instrument. This means of investment then holds the underlying securities (as within the mutual fund). Each of these two traditional investment strategies, namely (i) trading individual securities or derivatives through brokerage services, or (ii) investing in funds, is for investors as described below. Is a drawback.

<u style="single">A. Key points of structural shortcomings inherent in fund products</u> 1. Impossible to select securities or not to consider securities selection Investors in a Fund may not select individual securities (or derivatives, which are hereinafter included in "Securities" unless otherwise indicated) that are included in or excluded from the Fund's portfolio.

An investor should be included in the investor's overall asset allocation by investing in a target fund, such as a fund that has stated that it will only invest in companies whose business is primarily computer software. You can choose the type of. However, this choice still gives the manager of the selected fund extensive discretion to make a choice among hundreds of securities.

In addition, with the exception of some target funds, matters such as social or moral issues (eg, you do not want to invest in or only invest in a company that has a business affiliation with a particular government, or No preference can be expressed, even in general, with respect to (for example, you don't want to operate in a particular sector, such as the defense sector, or you want to operate on its own). Even in the few cases where a target fund exists for these types of preferences, the preferences that investors can reflect are at best very abstract, and whether investors include or exclude them from their portfolio. You cannot select a particular stock.

Investors may also not adjust the specific securities, or allocations or quantities in which the Fund is incorporated into its portfolio. Investors can choose, for example, a fund that reflects the index, which later invests in any security, including the index, in any allocation. As a result, when an investor invests in a fund, the investor may also invest in securities that the investor may prefer not to have an equity interest in or often prefer not to have an equity interest in. In addition, investors who invest in multiple funds or hold other investment securities other than the one fund, as well, often without any mechanism to modify their allocation without his knowledge. Will be over-allocated or under-allocated, especially in industry or equities.

2. Non-adjustable tax effect Investors in a fund receive dividends of ordinary income at the discretion of the fund (with certain legal restrictions), which depends on the fund's investment style. Funds that buy and sell portfolios often trade more than funds that don't, but taxable dividends depend on the fund's management behavior, not the investor's management behavior.

For most funds, for example typical open-ended mutual funds (showing the overwhelming amount of all diversified investment instruments, such as funds holding an outstanding $ 4 trillion of investor funds), deductions are made. Taxable income "flows through" to investors. In other words, the investor can flow through any taxable income earned from the activities of the manager, and such income is taxed at the ordinary income tax rate. Investors have no control over these effects and will pay taxes on the income earned by the fund, even if the investor has contracted that there are no transactions within the fund during the year. You will have to pay. In addition, taxable losses cannot be diversified by the fund, only taxable income. As a result, investors are only obliged to pay taxes by the fund and have no tax incentives.

To avoid these problems, some investors who have enough of their large holdings to make up for them can get some flexibility in contracting with a combined tax strategy, but these Strategy is expensive to implement and is not useful for small investors.

Alternatively, an investor can invest in a fund that seeks to limit the uncontrollable tax effects of that fund. For example, a fund that contracts without stock selection, such as an index fund or a fund that simply invests in the largest 500 or 1000 companies, comes from the manager buying or selling securities to adjust the holding of the portfolio. Trading volume will be low. However, even these funds are purchased and sold by the funds to reflect investor redemptions or cash payments. As more investors buy a fund, their manager buys more specific securities. Upon redemption, the manager sells some securities in order to obtain cash to pay the fund holders who wish to redeem their interests in the fund. As a result, if deducted income exists in these transactions, holders of these funds, which are generally tax flow-through funds, will receive taxable income regardless of their request. (Such a fund will have an inflow calculated by deducting investment from investors, but since the fund will have acquired securities almost exclusively, there will be no or little tax effect. However, limiting the tax effect would be much more difficult if the fund had a final deductible outflow.)

3. Unmanageable tax effect Persistently, some securities within a fund will depreciate, while the fund as a whole will increase in value (or vice versa). Investors in higher-valued funds cannot choose to earn capital losses by selling lower-valued securities (the funds themselves cannot avoid losses). Conversely, investors also cannot earn capital gains by selling devalued assets within a depreciated fund as a whole. Trading of these specific securities, as a whole, takes place at the discretion of the fund manager of the fund and affects all investors in the fund.

In some types of diversified investment instruments where such tax effects do not flow through, the investor does not earn any income or loss due to an increase or decrease in the value of the underlying assets. An investor can only sell some or all of his equity in the entire fund, which has increased or decreased the value of the fund as a whole against the investor's tax base. There will be income or loss depending on.

In all cases, investors, whether flow-through or not, cannot sell some of the securities in the fund and therefore have various tax effects derived from the underlying securities in the fund. , Unable to manage for his own benefit.

4. Impossible to exercise the rights of investors or rights related to reinvestment or dividends As mentioned above, the securities held in the fund are held by the fund and the investor simply has an interest in the fund. As a result, fund investors vote on the underlying securities, offer (or not) buy them in a takeover battle, decide to reinvest their dividends, and pay dividends as shares instead of cash. You do not have the right to exercise any pre-emptive rights or any other investor privileges or investor rights that may exist with respect to the securities held in the Fund.

5. Cost change / non-adjustability There are two types of billing in the fund. Fees collected from direct investors to buy, sell or hold equity within the fund and fees collected on the fund to manage, advise and provide other services to the fund. Is. Investors purchase or sell less frequently, or directly from the fund rather than through a broker or broker (such as a bank or insurance company) claiming compensation or surcharges. You can take a position to control the fees you bear to some extent, but investors cannot influence or adjust the fees collected on the fund. These fees, which are based on the percentage of assets under management, are paid by the fund, reducing the fund's returns or increasing losses.

6. Uncorrectable during the day Fund investors can only make one investment decision. That is, you just buy or sell your stake in the fund. Due to the structure of open-ended mutual funds (the overwhelmingly major type of fund), the decision is only valid once a day. For example, an investor who expects the market to go down or an investor who expects to go down in the morning but up in the afternoon will have a mechanism through an open-ended mutual fund to buy based on the price of the day. Does not have. All open-ended funds are priced at the time of closing, and in fact the price is only available once a day, and all investors, whether buying or selling, are of the day. Get the closing price no matter when our order was placed. This lack of enforcement flexibility is an important consideration for certain investors, who direct them to brokerage or other means of investment rather than mutual funds for their investment activities.

Certain funds other than open-ended funds, such as closed-ended funds or certain trusts, as well as derivatives can trade during the day and therefore reflect price movements during the day. However, each of these investment instruments has negative characteristics that are unpopular with investors. This feature includes discounts on the fair market value of the underlying securities, less transparency than open-ended mutual funds, or a static portfolio that is relatively unchanged. And they are not generally considered as an alternative to open-ended mutual funds. Moreover, in these means of investment, investors only buy or sell equity in the fund and cannot buy or sell securities owned by the fund.

7. Impossible to monitor and adjust investment risk levels and styles Investors in a fund can receive historical information regarding the risks and returns of the fund. Actively managed mutual funds, as opposed to passively managed index funds or static portfolio trusts, are managed by individuals and are often decided to buy or sell by a team of individuals. As some of these individuals leave the fund, the style of the fund's investment may change. Even if these individual managers never leave the fund, the market will buy or sell securities to them under a particular "style" different from what they were doing before. Gives some opportunity. Or their view of the market changes and their investment mixes accordingly. Certain investors in these funds accept these changes in their style, direction and perspective as part of what they are paying along with management fees. However, others attempt to select a fund based on the risks it envisions, the sector of interest and other factors (eg returns on previous returns or indices). However, in the future in these funds, unless the fund is outsourced to a mechanical style of investing with very limited discretion (typically index funds but very rarely actively managed funds). The factors mentioned above cannot be adjusted.

8. Impossible to switch fund family or fund without consequences Since funds are organized and managed by advisors of specific investment companies, they are owned by the assets of a specific fund complex. As a result, Vanguard, for example, because an investor is investing in the Fidelity S &amp; P 500 Fund, for example because of low rates, or because, for example, the investor changed jobs and her employer recommended Vanguard instead of Fidelity. If he wanted to switch to the S &amp; P 500 fund, the investor would have to sell all of her stake in the Fidelity Fund and buy a stake in the Vanguard Fund. If the equity is not held in a tax incentive account such as a 401 (k) account, the transaction will be taxable. In fact, even if you switch from a fidelity fund to another fidelity fund, you will be taxable (unless your equity is held in a tax incentive account).

9. Impossible to manage multiple investments as a whole When an investor invests in multiple funds, it is extremely difficult for the investor to understand the overall portfolio characteristics of their investment. In other words, many investors may have one or several investments in a fund in a 401 (k) or other severance account, and some other funds in addition to their severance account. May make an investment or an individual equity investment. These investors generally do not manage multiple funds as a portfolio to manage as a whole and their entire portfolio of individual equity receivables. This is because it is extremely difficult to recognize the risks and returns of a portfolio of multiple funds and individual stocks as a whole. Of course, it is a unified portfolio that will ultimately give investors a return. Certain investors make money by having multiple funds managed by investing in a "fund of funds" that seeks to invest for the fund. Even in this case, the investor's portfolio is a fund or investment that is not part of a complex "Fund of Funds" for the purpose of determining whether the investor's entire portfolio is well managed. Does not include individual shares held by the house.

<u style="single">B. Key points of structural shortcomings inherent in broker services</u> 1. Impossible to build a cost-effective diversified portfolio Under portfolio theory, investors need to build a diversified portfolio when investing. Diversification allows investors to earn comparable returns at lower risk or higher returns at comparable risk compared to non-diversified portfolios. Simply put, according to portfolio theory, a general investor holding a non-diversified portfolio of publicly traded securities has no advantage, as opposed to holding a diversified portfolio. However, only a few small investors can build a diversified portfolio. The downside of building such a portfolio for small investors is that the average investor himself has such a portfolio, even considering the transaction costs required to build and maintain such a portfolio. The inability to build, as well as the inability to complete the transaction with the small amount required to build such a portfolio. Therefore, from diversification, most investors who understood profits, or at least understood that profits existed, turned to mutual funds. And despite the disadvantages of investing in mutual funds mentioned above, such hopes for diversification are a major factor in the explosive growth of such funds. Simply put, the underlying idea of the brokerage business is the selection of individual stocks, not the construction of an interactive portfolio of securities (the ones left to the fund).

Cost: The cost for a small individual investor or an investor who wants to invest a small amount to build and maintain a diversified portfolio trunk, partly derived from the cost of brokerage operations. Investors hire brokers to buy and sell individual securities. Brokers purchase securities of their choice for investors, either directly or from dealers or on exchanges. The cost of buying and selling securities to retail investors is generally reflected in the two categories of rates. (For large institutional orders, those two costs are generally significantly lower on a percentage basis to investment than for small orders, but for example, due to the market impact of the order itself, i.e. a very large buy / sell order. There are significant additional costs to those large orders resulting from the possibility of affecting the price at which the order is executed by moving the available bid and sell prices. Other systems (Optimark) (Optimark®) Trading Systems, ITG-Posit, see below) is trying to solve this problem for those large institutional investors.

The first cost is the cost directly imposed on the investor in the form of broker transaction fees and fees. The second is the transaction itself (markup or spread) between the cost of securities acquired by an exchange specialist from a dealer or another investor and the cost of securities sold to us. This is the fee charged to). This is often a "hidden" cost from investors. Investors are not always aware that spreads are often present, even when fees are charged. But it is a considerable cost that even exceeds the stated fee many times.

Through increased technology, efficiency and productivity, competition, etc., their costs decrease over time. However, for the most part, the cost (such as markup or spread) is still at least $ 10 per security traded (even for the most discounted brokers and even if 100 shares are the minimum trading unit). .. This is even the case when the stated fees are reduced and in some cases zero. Because broker-dealers are drawing high "spreads" from investors that investors are not usually aware of. Moreover, the current view is that costs have reached the lower limit of price, and without new systems such as the present invention involved in the transaction, costs will not be further reduced.

To build and maintain a diversified portfolio of personal stocks, investors should purchase at least 20-50 shares and, on a proportional basis, when new funds are accepted for additional investment. It will be necessary to be in a state of addition and to rebalance its portfolio on a regular basis as markets and securities change. That is, the investor must first build a diversified portfolio, for example by purchasing 50 shares, and then in an appropriate allocation, eg, by any additional amount required for investment. Continue to buy stock on a monthly basis and rebalance your portfolio on a regular basis. Obviously, basic broker operating costs will be terribly high for the average investor, even with the most discounted broker services. For example, an investor seeking to invest $ 2000 a month (which is relatively large for the average investor) to build and maintain a diversified portfolio is at least $ 500 (and perhaps optimistic). That is, for the first 50 shares, which is a full 25% of the initial investment, you will probably bear the transaction costs, including the minimum. Such charges are obviously terribly high.

Best if an investor can handle $ 2,000 a month and does not want to invest in a fund or derivative product, such a portfolio at a low cost by buying one or two separate stocks each month. Will try to build a diversified portfolio over the years. Such a strategy has many drawbacks as well as it takes years to realize. Investors can also grow into an already diversified portfolio at low cost by purchasing just one or two shares in a row each month. Just as the problems with fixed portfolios that result from mutual fund investments, the shortcomings of inflexibility, uncorrectable portfolios, etc. also exist in this strategy. Only with investments close to $ 10,000 a month, which is an exorbitant level for most investors, those costs will be considered non-exorbitant on a repeatable basis. In addition, small investors with limited investment funds are, in practice, low-value, ie, $ 10-20 per share (hence the trading unit would be $ 1,000-2,000). , More biased than in the case of $ 100- $ 200 per share (hence the trading unit would be $ 10,000- $ 20,000), thus limiting stock selectability.

In fact, due to brokerage operating costs and constraints, as opposed to through a fund, it is possible for a general investor to build and maintain a diversified portfolio on its own, even if it is a means and technology to do so. Even if you have, there is no possibility that you can do it.

Capability: In addition to exorbitant costs, the average investor does not have the skills or tools necessary to build and maintain a diversified portfolio with the desired risk-return characteristics. In order to build such a portfolio, investors need to understand the risks dictated by the perspective of portfolio theory and to have data and a mechanism to analyze the data in order to use this theory. is there. The data then needs to be used correctly in relation to the trading system to enable cost-effective construction and maintenance of the portfolio. There is no brokerage (or other system) that deploys, uses, and works with the required decentralized information in combination with trading systems for general investor access. Various systems that advise investors on building a portfolio of mutual funds, especially based on risk, style, efficacy and valuation (eg Schwab One Source (www.schwab.com): There are Financial Engines (www.financialengines.com) and a new Microsoft site (http://beta.investor.com). However, these systems allow investors to cost-effectively (as opposed to helping to buy a few specific mutual funds, along with all the incidental disadvantages of holding a mutual fund), certain securities. To buy a portfolio of, or (as opposed to a fund's equity), to hold a fractional share of a security, or, as opposed to a fund, any other that arises from the nature of investing directly in a security. Not designed to be profitable. All of the above will be discussed further below.

2. Impossible to purchase equity in small and odd shares It is possible to obtain equity in small and odd shares through a direct specific dividend reinvestment plan from an issuer. However, those plans are operated by selected issuers and have a number of important restrictions, such as average pricing, usually over weeks or months.

Buying and selling securities through the general brokerage business requires transactions that are carried out in the smallest unit of natural numbers. That is, an investor can buy IBM for one or more shares, or sell for one or more General Motors shares, and the purchase or sale must be, for example, 27 shares instead of the natural number, 27.439 shares. Moreover, the cost is often exorbitant for small transactions of securities (eg 1 or 2 shares), or even for transactions less than a trading unit (100 shares). Investors who buy trading units in general securities trading of $ 20-40 will buy securities worth at least $ 2,000-4,000. Buying 50 trading units to build a diversified portfolio requires a larger investment ($ 100,000- $ 200,000) than most investors can make. As a specific example, an investor who wants to invest $ 150 a week can buy up to 7 $ 20 shares or 3 $ 40 shares and invest in a balance in cash through the general brokerage business. You can then wait until the next week to buy different shares or more identical shares. But, for example, a broker operating cost of $ 5 per security traded would be between $ 15 and $ 35 (from an exorbitant 10% to over 23% of investment). This is not a practical alternative. The only alternative that is valid today for investors in this position would be investing in funds.

3. Impossible to select individual securities that reflect preferences because they are included in the diversified portfolio Using a broker, a small individual investor, or an individual investing a small amount, can clearly select individual securities for sale. However, the general brokerage business does not provide a mechanism to readjust the entire portfolio of holdings as an integrated portfolio of investments. Therefore, most investors will be overburdened on a particular security or sector, as the cost of rebuilding their portfolio and the inability to determine the overall profile of the portfolio. Investors will generally not be in a position to diversify the portfolio due to the cost issues mentioned above, even if the overall risk and other profile characteristics are determined.

In addition, the general brokerage business involves investors with respect to other factors related to the company that may influence the investor's decision to buy or sell shares in the company, such as social, moral or political considerations. Rarely provides assistance to.

4. Impossible to obtain excellent transaction execution Brokers generally execute transactions when instructed and therefore provide "immediate" execution. But there are exceptions. For example, a transaction can be a "limit" order, which means that it can only be executed at a certain price or higher. Limit orders are generally executed immediately whenever the price reaches the limit price. The transaction is also at the time of the "close" or "close", which means that the transaction will be executed as part of the close or close of the call auction procedure, or at the time when certain other conditions specified by the customer are met or It can also be set to be enforced at some other time.

As a general rule, under the control requirements available, customers are required to undergo the so-called "best execution". However, such enforcement would not be the best price a customer could receive if the enforcement system was different. There is often a trade-off between price and liquidity. If the customer demands immediate enforcement, the price may be somewhat more disadvantageous to the customer than if the customer wanted to wait. Moreover, if the customer wishes to postpone the plan to execute this order until there are multiple other orders, the customer will be able to obtain better execution again. This is because the flow of orders to be matched with this order is concentrated. Numerous specialized brokers (and other trading systems) now allow institutional investors to suspend the flow of orders and attempt to match the pending orders at various times. There is. In addition, many brokers can send orders to others, such as market makers or exchanges, and they can aggregate the flow of orders, resulting in better binding of purchases to sales. Therefore, price improvements or better enforcement are provided as compared to otherwise.

There are trading systems that attempt to improve trading capacity for customers, but they are various forms of "matching" mechanisms (sometimes very much) that require a buy and sell order to be matched. It functions exclusively as (although it has a complex algorithm). They suspend the flow of orders over time or according to specific preferences, such as the Arizona Stock Exchange, which operates regular call auctions, to match buy and sell orders five times a day. It is an ITG-Posit that operates a cross system, and an Optimark trading system that matches buy and sell orders according to various algorithms. In addition, those systems are not necessarily required, but are primarily targeted at institutional investors and are not intended to be used by individuals or small investors (although possible), anyway, below. As further fully explained, they do not provide the missing capabilities mentioned above.

5. Impossible to monitor portfolio based on tax effect Brokers can clearly monitor the overall tax effect of the portfolio for their customers, but generally they do not. The concept behind the brokerage business is usually the selection of individual stocks for purchase or sale, not the construction and maintenance of a diverse portfolio. Therefore, recording profits and losses on a base and securities as an element of the portfolio rather than as an individual investment is exceptional and generally unavailable in many standard securities accounts. If the customer gets that advice, if it is available from a broker, it is usually expensive.

6. Impossible to assist shareholders in exercising their rights As with tax-effect issues, brokerage operations are designed to provide assistance with personal securities trading, not with respect to other issues. Therefore, the investor is transferred the material, eg, the power of attorney, without the advice or direction of the broker.

7. Impossible to limit portfolio characteristics In recent years, brokerage services are often unlicensed, but are licensed in some self-managed retirement accounts established by employers (eg, 401 (k)). Partial reasons are that employees, especially those with little insight, may not be fully aware of the risks of investing and may invest in securities that are too dangerous or portfolios that are not well diversified. And as a result, employers are worried that they will possibly lose many or all of their expected retirement benefits. Therefore, limiting the choices an employer can make by offering them a limited number of investment choices means that the employer generally means various types of funds almost exclusively. This is because we hope to provide diversified investment within each investment instrument so provided. Brokerage was not offered because there is no way to ensure that employees invest in a diversified portfolio with a particular maximum risk level (and therefore the fund of choice for them). It is a practice to force you to invest in).

Traditional system Electronic trading systems are known. The OptiMark (Trademark) trading system allows large institutional investors and those interested in being able to move the market by placing large orders to place such orders with minimal market impact. Is. It is based on the concept of a trader with a useful preference function for a particular transaction. As an example, the Optimark trading system works by letting a trader identify how much he will pay above the equilibrium price to buy a block of securities. The system then attempts to match a trader's trading preference to another trader's preference in order to complete the transaction. Therefore, the Optimark trading system makes price discovery.

ITG-Posit is an electronic equity equity matching system that allows investors to find the opposite of their trading while the market is open. Posit uses the mid-price of the day. Buy and sell orders, including individual stocks and portfolios, are handled by the System; 5 times a day, Posit processes and compares orders. Second, trading on Posit, when the sign continues, in the primary market for stocks, the spread between the bid price and the bid price (between the best seller's bid and the best buyer's offer). Can be priced at the midpoint value. The order associated with that price is executed. Investors may retain unexecuted orders in the System for future matching, or electronically submit the above orders to any of the major, significantly regional exchanges, or market makers in the over-the-counter market. It can be distributed on a stock market or the order can be executed on a proxy basis. Posit is used by major public bodies and brokers / dealers. Posit, such as the Optimark trading system, is essentially an order matching system, or Posit matches transactions at medium prices (determined by a third party system) during the individual price discovery process. It assumes that traders want to trade with each other and that such traders offer potentially better execution (because of the midpoint price) with lower market impact. Due to the anonymity of the trade and the increased liquidity available, based on the concentration of the trade in the time frame).

The New York Stock Exchange and the NASDAQ market also match the flow of orders together and, of course, limit the number of people who can trade securities during the day to centralize orders from the start to the end of the exchange. Collect order flow (The flow of orders on an exchange for a particular stock goes through one specialist, and in NASDAQ, by moving to the "market maker", all the flow of orders on NASDAQ is said to be the market maker. A per-share specialist on the New York Stock Exchange, focused on this role).

Schwab, a financial institution (and possibly Microsoft), is a group of mutual funds available to stakeholders based on risk-return and other factor analysis in the selection of mutual funds or the construction of a portfolio of mutual funds. Provide services to assist investors (eg, stakeholders in the 401 (k) plan) by choosing between. Once the analysis is complete, the participant then follows his participation rules (if it is a 401 (k) plan) or through a broker or other person providing the fund. Select a mutual fund for your portfolio. Although there is no direct mechanism for financial institutions and Microsoft to accurately make the desired purchase of a fund's equity, Schwab utilizes its ability to obtain equity in the fund directly through the shwab. .. However, although there is no mechanism for the participants to select, build, improve and enforce a portfolio consisting of individual equity interests, such investments in equity interests were made prior to the present invention. For small investors, acquiring or trading an individual's equity interest in small or partial quantities on a cost-effective basis, or managing an individual's equity interest as an integrated portfolio of a series of individual investments. Whereas it was impossible, it is a completely different form of investment than investment in a fund.

Portfolio (or cash) management accounts and similar investment instruments exist and are offered by several brokerage services. However, they do not manage a portfolio of securities, but simply combine one reporting statement information about various types of assets held by clients (funds, stocks, bonds, cash, etc.), and brokers. It is a little wrong in terms of strengthening the relationship between. These accounts primarily require the consolidation of various types of services such as credit cards, loans, checking / saving, brokerage and mutual fund holdings.

Programs and databases provide a mechanism for investors to screen raw information on volatility and indices and stocks on individual stocks to obtain a list of those stocks that fit a profile or parameter. Exists in.

There is a system that allows users to screen the portfolio of another party, primarily an investment manager who files documents with securities and currency exchange fees. These systems are used to screen mixed portfolios or other investor characteristics (eg, attorneys or individuals earning $ 75,000 or more) to obtain portfolios that include the mixed characteristics of other investors. It does not create a mechanism for system investors.

There are systems designed to create derivatives and futures in which investors can obtain the market risk economic benefits of portfolio investments similar to those of the present invention. However, for regular reasons, these systems are not currently accepted in the United States and induce credit risk for derivatives / futures issuers and differ from those provided by using the present invention. And vice versa, do not offer the exercise of shareholder rights, do not allow the selection of certain shares that reflect uneconomical preferences (eg not related to tobacco), and generally replace with the present invention. There is nothing at all.

Some mutual fund complexes are to screen their clients for mutual funds and make them available so that they are satisfied and, as a result, make them invest in the mutual fund. Make available the ability to determine if the fund best fits the parameters. For investors, as mentioned above, this system has all the drawbacks of investing in mutual funds, as opposed to the underlying securities.

Some systems, such as financial institutions, provide investors who choose several mutual funds with a means of satisfying the purpose of an investment. These systems do not provide a means for selecting a portfolio of individual stocks that will satisfy an investment objective as a portfolio. In addition, the systems that exist to review mutual funds review or analyze mutual funds in combination with personal securities that may better reflect the actual overall investment held by small investors. There is nothing to do.

<p> Therefore, the present invention is a problem of developing a method and a device that enables an individual or a small investor, or an investor who invests a small amount, to construct and manage a composite portfolio of equities on a cost-effective basis. Regarding.</p>

<p> Abstract of the invention The present invention is an individual or small investor who builds and manages a composite portfolio of stocks on a cost-effective basis, which invests a small amount and is collectively referred to herein as an "investor." Solve the problem (including investors). The present invention does this by providing a computer-based system in which the investor provides his or her preference, which system builds a portfolio that reflects the investor's preference, or in selecting the portfolio. Allows investors to modify their portfolio as a whole, and directs investors to buy, sell or modify the portfolio or specific individual securities within the portfolio as a portfolio transaction. To enable. In addition, the system aggregates orders placed by other investors during the day and at various times for execution, and has a specific share, including a small number of shares (if required and odd lots). It has a device for such execution by the investor to be allocated. In addition, the system deducts various well-organized transactions to provide better execution and lower costs.</p><p> According to one aspect of the present invention, a system for allowing multiple individuals or small investors to build, manage and trade a portfolio of assets / liabilities has a processor and a storage device. The processor communicates with investors via multiple communication lines and receives investor perceptions and preferences and transaction data from each investor. The processor in each asset / in transaction data from each investor to obtain a single economically viable buy order and a single economically viable sell order for each asset / liability. Combine all buy or sell orders for debt and all other economically infeasible buy and sell orders. (As used herein, economically impossible orders include odd-lot shares, sub-unit shares, and small amounts of shares, which cannot be traded normally or on a cost-effective basis. ) The processor then transmits a single economically feasible buy order and a single economically feasible sell order to a third party for execution. The storage device is connected to the processor and stores transaction data from each investor.</p><p> In addition, the processor creates an investment class percentage allocation for each investor based on the allocation model input from each investor and communicates the resulting investment class percentage allocation to each investor. In addition, the processor interacts with each investor to determine an investment portfolio that corresponds to an investment class percentage allocation for the investor. The processor includes any of the investments currently held by an investor, such as an investment in a mutual fund or other fund as well as an individual's stock already owned, in making an allocation decision for the investor's overall investment. These investments are included to determine the characteristics of the portfolio.</p><p> One particularly advantageous aspect of the system is having an electronic payment settlement mechanism for linking to the processor and to a third party electronic payment settlement system. The electronic payment settlement mechanism transmits an electronic payment settlement request for each investor to a third-party payment settlement system, and electronically pays for each investor electronically from the third-party payment settlement system upon request. Receive payment data. Further, the electronic payment settlement mechanism maintains one plurality of settlement accounts for each investor. Further, if the payment settlement account of a particular investor has a predetermined amount, the electronic payment settlement system only allows the trading of assets / liabilities for the particular investor. Further, a storage device is connected to the electronic payment settlement mechanism to store the electronic payment settlement data of each investor and the payment settlement account of the investor.</p><p> Further, the system of the present invention provides a second communication line to a third party trading system through which the processor transmits a single sell order and a single buy order for each asset / liability. You may have.</p><p> Further, the system of the present invention has an investor program to be executed on the investor's personal computer as needed, and the program requires the investor identification information and the investor preference, and the investor Communicate identification information and investor preferences to the processor, and interact with the processor to allow investors to select multiple assets / liabilities to create an investor portfolio in proportion to the percentage allocation of investment assets. Allows you to. The investor program may have a graphical investor interface that shows investors the risk and correlated differential returns of the entire investor portfolio against standard industry standards, as well as the risks and returns on an absolute scale. The investor program also allows investors to adjust the percentage allocation of investment funds and the investor portfolio. In addition, the investor program communicates investor identification information to the processor as transaction data over one of the communication lines along with the asset / liability transaction to be executed, and the investor's actual portfolio is the investor. Form or modify the investor portfolio to ensure that it fits your desired portfolio.</p><p> According to one aspect of the invention, the system stores an investor's program in storage and sends the program to that investor when requested by the new investor.</p><p> According to another aspect of the invention, the electronic payment settlement mechanism electronically requires periodic payments from a third party payment settlement system for each investor. One possibility is that periodic payments are monthly or weekly payments.</p><p> According to another aspect of the present invention, in order to make a profit from an investor's transaction, a commission or fee based on each settlement is charged, or a reward (payment for the flow of an order) is charged on a per-stock or per-transaction basis. Unlike all traditional brokerage operations that receive (including items such as), in the present invention, the investor has a flat periodic fee (eg, a monthly or annual fee charged by a financial planner), or a system. An asset-based fee (for example, as a mutual fund normally charges), or a combination of a periodic fee and an asset-based fee, consisting of a specific amount of assets held in. Alternatively, you may be billed for a combination of these fees and transaction-based fees.</p><p> According to yet another aspect of the invention, transaction data can include fractional shares of assets / liabilities that are desired to be traded.</p><p> According to yet another aspect of the invention, the investor program maintains tax-based information, such as acquisition dates, for all assets / liabilities traded by the investor. The investor program can also provide investors with information about the voting rights of assets / liabilities held by the investor.</p><p> According to one aspect of the invention, the processor receives actual transaction price formation information for a single buy order and a single sell order for each asset / liability from a third party trading system. The processor then sends to that particular investor the actual transaction price formation information for each asset / liability traded by that particular investor. In response to the actual transaction price formation information received by a particular investor, the investor program follows the risk and risk of the entire investor portfolio according to the actual transaction price formation information for each asset / liability traded by the investor. Change the display of correlation differential returns. Based on this information, if the investor portfolio no longer fits the previously determined percentage allocation as a result of the actual transaction price formation information received from the processor, then the investor portfolio fits that percentage allocation. As such, the investor program encourages investors to modify their investor portfolio through the graphical investor interface.</p><p> According to another aspect of the invention, at least one of the communication lines to the investor has a communication line to the Internet. In addition, the system can have a graphical investor interface that is displayed on a pre-determined worldwide website, through which new investors can provide investor identification information to the system. In this case, when the processor receives investor identification information from a new investor, it follows the investor identification information identified by the new investor over one of the communication lines and the new one. Go to an investor and get payment information from the new investor. This communication line can include a direct dial-up telephone connection, can include a direct dial-up telephone connection initiated by an investor, and a direct dial-up telephone connection to an intermediary server initiated by an investor. And a network connection from an intermediary server invoked by that intermediary server, to a first direct dial-up telephone connection to an intermediary server initiated by an investor and to a processor invoked by that intermediary server. A second direct dial-up connection can be included.</p><p> According to another aspect of the invention, an investor's interface that allows an investor to build, manage and trade a portfolio of assets / liabilities and is an interface to a system that manages multiple investors. A personal computer-based program that runs on a personal computer that provides transaction information about at least one asset / liability transaction that the investor wants to make to the system via the primary communication line. The program to be sent includes the following elements. The graphical investor interface requires investors for investor identification information and investor preference data. The asset allocation modeling process forms a percentage allocation of an investor's assets based on investor preference data. Here, this graphical investor interface displays multiple assets / liabilities via a computer display, allowing investors to choose to form an investor portfolio in proportion to the percentage allocation of assets. The risk and correlated differential return calculation process calculates the risk and correlated differential return or its absolute value of the entire investor portfolio against standard industry standards and provides the relative risk and correlated differential return to the graphical investor interface, this interface. Displays relative risk and correlated differential return. The portfolio editor process allows investors to adjust their investor portfolio. The telecommunications process communicates investor identification information along with the asset / liability transaction to be executed, forming an investor portfolio to ensure that the investor's actual portfolio matches the investor's desired portfolio. Or change it and send it to the system as transaction data via the first communication line. In this program, the graphical investor interface displays relative risk and correlated differential returns as color codes, numerical indicators, arrows on scales, arrows on numerical ranges, and arrows on horizontal or vertical scales.</p><p> According to another aspect of the invention, the system allows the investor to move a slide or other indicator on the graphical investor interface to color code, numerical indicator, arrow on scale, arrow on numerical range. By adjusting the arrows on the horizontal or vertical scale, and by doing so, the risk and return levels required by the investor's desired portfolio can be changed. As a result, investors can directly adjust the characteristics of the portfolio by changing the position of the indicator, and the system preserves the changed and requested characteristics, and the investor portfolio of securities. Select securities to be introduced into or removed from the portfolio, or weight such securities in the portfolio so that the portfolio characteristics of the investor match the portfolio characteristics so selected by the investor. In this case, the system recommends or suggests to the investor that, in combination with other choices or preferences that the investor may have, include securities in the investor portfolio that meet the investor's risk and return choices. Will.</p><p> According to another aspect of the invention, the system has not been acquired through this system in its correlation differential risk and return calculations, but the investor has noted or stated to the system by the investor. Includes securities such as funds held and other investments, thereby determining the overall portfolio characteristics and recommending or proposing which other securities should be included in the investor portfolio.</p><p> According to another aspect of the invention, the system is such that a sponsoring organization, such as an employer, allows all investors in the sponsoring organization's system (eg, employees in the employer's 401 (k) plan) to use the system. It may be used to invest, but it allows you to specify that their portfolio must always meet certain specifications. Its specifications include a minimum number of shares (eg, 30 shares), a maximum concentration on a particular stock (eg, 5%) and a maximum risk level (eg, 10% risk than the market defined by the S &amp; P 500 risk level). Can include). Similarly, a head of household may create an investment account for other members of its household by imposing similar restrictions or any other restrictions desired along a similar line. Can be done.</p><p> According to another aspect of the invention, the program comprises a configuration control process that provides the system with a version number of the program in response to a request from the system. Here, when the system detects that it is an older version, it downloads an updated version of the investor program.</p><p> According to another aspect of the invention, methods for building and managing a portfolio of assets or liabilities by conducting multiple transactions are: a) gaining investor preference for the investor's portfolio characteristics, b). Using portfolio characteristics to describe and select an asset or liability that should be traded by an investor in multiple transactions, and c) one investor's transaction across the applicable properties of the asset or liability to the other. Includes the process of aggregating with investor transactions. In this case, the transactions can be aggregated over a fixed period of time, such as every 3 hours, every day, or multiple times per day at a predetermined time. Once the transactions have been aggregated, the transactions are executed.</p><p> According to another aspect of the invention, the method comprises the steps of aggregating the transactions, then deducting the transactions against the transactions of another investor, and then executing the remaining transactions after this deduction calculation. ..</p><p> According to yet another aspect of the invention, a device that allows multiple investors to make periodic investments in a portfolio of securities includes a processor and a storage device. The processor receives data from each investor about the amount to be invested in each investor's portfolio, and accesses and is required to access the electronic payment settlement system when instructed by the investor to purchase securities. Get payment settlement for a purchase. The storage device stores each investor's portfolio. The device may have an interface device to a third party trading system, which aggregates the transactions of all investors and treats the aggregated transactions as a single transaction in each security. Send to the trading system. This order may be deducted and then sent to a third party trading system.</p><p> The invention, if acquired by an investor, directly owns the underlying security while having a portfolio that reflects some strategy or preference determined by some other means. It is also possible to consolidate securities into a pre-packaged portfolio that gives investors all the benefits of. For example, a currently popular strategy is to invest in 10 of the 30 stocks in the Dow Jones Industrial Average, which had the lowest performance in the past calendar year. These 10 stocks are expected to outperform the index in the next calendar year. As a result, investors who now follow this strategy generally buy their stake in a unit investment trust. Each year, the trust is liquidated, and investors wishing to continue this strategy must purchase new equity in the new trust the following year. These trusts are usually sold by brokers who have a maintenance fee and put a lot of effort into acquiring the trust unit. In addition, the unit is dominated by the sponsor. If an investor wants to buy nine of the poorest performing stocks instead of the ten, there is currently no good mechanism for doing so. In addition, the investor owns a stake in the trust that has many of the same negative characteristics as the above funds. Therefore, according to yet another aspect of the invention, a button on the graphical investor interface is simply clicked and proposed consisting of selected securities groups such as 10 poorly performing stocks in the Dow Index. Receive a portfolio. Investors may keep the portfolio as proposed, or if desired, remove one of the shares to the 9 above, or add another to 11 Alternatively, the portfolio may be modified by, for example, changing the relative weighting of 10 types. Po for the investor, as if the investor had selected securities to be included in the portfolio by other means. You can get a tofolio. In addition, portfolios for pre-packaged investors as a starting point are also selected by investment magazines, analysts or investment banks, or organizational preferences over the next few years (eg, AFL-CIO or business rounds). It can be a portfolio recommended by another preference or selection, such as a table preference or member), or a celebrity selection, etc. In each case, the investor enjoys the benefits of a system that provides a portfolio of directly owned securities, as opposed to an equity interest in a fund or trust.</p><p> The present invention also provides the collection of information about a plurality of investors involved in the system of the present invention. Investor characteristics are collected and accumulated on an anonymous basis so that subsequent access to information obtained from investor statistics and demographics is not tracked by any particular investor. This data collection capability leads to new investment strategies. For example, information can be gathered from a large number of patent attorneys and economists. In that case, investors involved in this system can make inquiries about specific affinity groups, such as patent attorneys and economists. Investors will be interested in what securities patent attorneys and economists are investing in.</p><p> Once the affinity group has been determined, the system, as a group, can collect statistical data about investors' attention to the patent attorneys investing in tech stocks. In that case, we can list the 10 most frequently traded tech stocks that patent attorneys are interested in. Similarly, the system can collect statistical data on how much risk and return generally characterizes current portfolio investments by economists and build portfolios associated with those portfolio characteristics.</p><p> If the investor is particularly interested in a particular affinity group, the investor may contact the system of the invention and pay attention to all securities invested by a patent attorney specializing in mechanical engineering. it can. In addition, comprehensive securities grouping can be provided, the top 10 securities traded by machine-specialized patent attorneys can be listed, and portfolio characteristics can be selected and attached. ..</p><p> Since various information can be obtained by the system of the present invention, various multivariate analyzes can be performed and various affinity groups can be constructed. For example, you can build a generalized profile for all investors with an annual income of $ 75,000.00 or higher. Instead, profiles can be constructed for all investors with a technical background in electrical engineering, regardless of their current profession. You can also create a securities list for all actors residing in California.</p><p> Once the investment characteristics and strategies of those affinity groups have been created, investors will have the same portfolio (risk / return characteristics, securities characteristics (eg high tech, individual securities?)) Listed for a particular affinity group. You can have an investment option by checking (or not). In this way, the system of the present invention can support affinity group investment. This affinity group investment also gives many options to investors who simply want to take advantage of the thinking process of an inexperienced investor or a particular group of investors whose characteristics are chosen by that investor.</p><p> A further utility of the present invention is to evaluate the relative performance of the portfolio of each affinity group. Such information can be analyzed over a period of time based on the information stored in the securities database of the present invention, as securities as groups (eg, utilities) or individual stocks (eg, Intel). Can be provided to investors. With this method, one investor may confirm that a Hollywood actor is a better investor than a patent attorney.</p><p> A further advantage of the present invention is that the present invention allows an investor to change his portfolio by simply changing his portfolio rather than selling all the securities held by that investor. Is to become. Therefore, an investment in a fund that an investor may want to switch from a fidelity fund to a somewhat riskier Vanguard fund (in which case the investor sells (may be taxed) the fidelity fund). Compared to having to buy a Vanguard fund), according to the present invention, the risk level of the investor is merely increased. According to one aspect of the invention, an investor wishing to attach a risk level of a particular fund (to the extent possible) may simply change the risk level of that particular portfolio as such. This can be achieved by leveraging the current securities position without the need to sell any securities.</p><p> According to yet another aspect of the invention, an investor may use multiple accounts (eg, IRA, 401 (eg, IRA, 401)) for analytical purposes so that the investor can understand and manage the portfolio as a whole integrated base. It will be possible to collect owned assets in k), and tax-exempt preferential accounts used by investors for investment. In this method, the investor combines all his assets in the form of securities and other investment properties into one integrated investment portfolio for the purpose of determining risk level, diversification, concentration, sectoral exposure and more. Can be seen as. As a result, the investor can benefit from having his portfolio appear as a unity as opposed to a series of unrelated investment properties, but for legal purposes the account is legally essential. Maintained as separate accounts that differ from each other. According to yet another aspect of the invention, the same concept of integrating legally essentially different accounts is applied to other securities, most of the equity in the fund, and individual securities or non-fund investment properties such as real estate. It can be used in connection with money and other investment properties that investors may own.</p><p> In addition, individual investors who want to invest in securities to reach their respective financial goals or who are likely to invest in securities often have various technical terms and various technical terms related to such investments. I don't have enough knowledge to understand their meaning. For example, the term "volatility" may be barely understood by new investors. In addition, such investors may have a particular desire for equities in terms of wanting to invest in "big business" or "high-tech" equities, but what do these terms really mean? Wouldn't have a definite source of information about. To help new investors take advantage of the diverse possibilities of the invention, we provide a natural language interface that allows investors to offer investment preferences in terms of their satisfaction. The natural language interface parses the investor's input language into securities characteristics that will meet the investor's requirements. For example, if an investor wants to invest only in a "big company," the natural language interface translates that request into a query for the company's annual income in the securities database. In addition, the term "big business" can be determined to mean, for example, a company with total annual revenues in excess of $ 1 billion. In other words, it shows that only a few stocks relate to the generalized portfolio of securities in the system's database. Therefore, from an investor's desire to invest in a "large company", a series of stocks that meet the characteristics requested by the investor are selected and displayed to the investor.</p><p> This natural language interface can be constructed in several ways. For example, keyboard-based inquiries are now done in most software packages, which allows investors to make inquiries in natural language, which is interpreted by the natural language interface into search topic suggestions. In addition, speech processing is currently attracting attention when speech input can be used as direct input to a natural language interface. In this method, investors who want to speak their wishes or individuals with disabilities who have difficulty using a keyboard can use their particular type of voice processor connected to the natural language interface of the present invention. You can enter a request for shares belonging to.</p><p> For investors who generally want to invest but are completely unfamiliar with stock-specific terms, a series of screens are presented to the investor in a natural language form that gives them choices, followed by securities. Regarding choices Investors can choose natural language forms as input to the system. For example, a screen can show an investor an option stating, "I want to invest in a large company." In this example, matching of this individual property on the screen results in a series of security properties that arise from queries to a generalized database of securities. In this case, a natural language processor is not always necessary. This is because "prepared" inquiries may already have rules regarding securities selection related to on-screen selection.</p><p> Therefore, this aspect simplifies investing in securities for investors who are new to investing or who simply lack the vocabulary to identify securities.</p>

<figref num="1">The process according to the present invention is shown in block diagram format.</figref><figref num="2">It shows a sample investor input questionnaire used in the asset allocation model.</figref><figref num="3">It shows the sample output of the asset allocation model.</figref><figref num="4A">A sample portfolio editor screen according to the present invention is shown.</figref><figref num="4B">A sample portfolio selection screen is shown using other portfolio starting points.</figref><figref num="5">The sample output of the portfolio selection process of this invention is shown.</figref><figref num="6">It shows the block diagram of the whole computer-based system of this invention.</figref><figref num="7">It shows the flow chart of the graphical investor interface provided to the investor during the construction or modification of the portfolio according to the computer-based system of the present invention.</figref><figref num="8">It shows a flowchart of a graphical investor interface provided to an investor in relation to an investor using another aspect of the system according to the computer-based system of the present invention.</figref><figref num="9">It shows a flowchart of the processing that occurs in a web server in connection with building or modifying a small sample portfolio according to the computer-based system of the present invention.</figref><figref num="10">It shows a flowchart of the processing that occurs in a web server in connection with building or modifying a small sample portfolio according to the computer-based system of the present invention.</figref><figref num="11">It shows a flowchart of the processing that occurs in a web server in connection with building or modifying a small sample portfolio according to the computer-based system of the present invention.</figref><figref num="12">It shows a flowchart of the processing that occurs in a web server in connection with building or modifying a small sample portfolio according to the computer-based system of the present invention.</figref><figref num="13">It illustrates the specific screens provided to investors during the various steps in the process of building or modifying a portfolio according to the computer-based system of the present invention.</figref><figref num="14">A block diagram of an exemplary computer-based system according to the present invention that interacts with an existing system is shown.</figref><figref num="15">The natural investor interface is shown as being related to a computer-based system according to the present invention.</figref><figref num="16">Demonstrates a jumble and co-filtering technique for affinity groups used in connection with computer-based systems according to the present invention.</figref><figref num="17">It shows a dialback security mechanism for sending sensitive information to websites.</figref>

<u style="single">Detailed explanation</u> As used herein, an asset, property or liability means any tradeable commodity or valuable item for which there is a market for trading. This definition includes securities, equity interests, derivatives, currencies, mass-market goods, insurance contracts, mortgages, bonds, aircraft reservations, hotel reservations, golf start times, country club membership, antiques, etc. .. The computer-based system of the present invention may be used with respect to any asset or liability traded, but the discussion here is primarily to use the computer-based system of the present invention in connection with securities for simplicity. Regarding what to do.

In the present specification, small investors generally refer to whether the investor is an institutional investor or an individual investor, and whether the investor is acting for himself or for others. Includes any investor who is investing a small amount, regardless of whether he or she is acting on. Small investors also include investors who are investing through financial planners, such as those who actually enter or access the system on behalf of the investor. The present invention comprises a computer-based system and a personal computer-based or personal computer-accessible program that provides a convenient and simple investment mechanism for small investors to invest small amounts on a regular basis. The program manages a portfolio of securities, including the ability to modify and modify the portfolio by selling or purchasing securities, to track tax effects, to exercise voting rights on securities, and to exercise voting rights on securities. To delegate such rights to a third party at the investor's discretion, to limit the parameters of the portfolio by the investor or others authorized to the account if desired, and to integrate the portfolio. This is to analyze the investment properties held by the investor based on the base.

By consolidating orders that are otherwise not economically feasible, such as sub-unit shares, odd-lot shares and small-lot orders into one large order, the present invention allows small investors to combine securities portfolios, i.e. Build an economy of scale that allows you to build, own and manage small mutual fund-type investments tailored to your unique preferences. By consolidating a large number of orders into one order, the present invention allows the cost to execute each economically, even with a small fee, which makes otherwise economically infeasible orders non-profitable. It will be based on a small fee for orders that are not possible. For example, if a small individual investor can only afford to invest $ 100 a month and wants to diversify and invest in 30 shares each time, the current big discount brokerage business is $ 5 per order. You have to pay one by one (this $ 5 is just a commission fee and does not include all costs due to wide spreads etc.). Obviously, no one pays $ 150 to invest $ 100. In contrast, the present invention allows small investors to invest $ 100 per month. This is because all orders entrusted to the system incur a one-time fee, and this one-time fee is distributed proportionally to all orders, so small orders only need to incur a small fee. is there. For example, if the total fee is 2%, the investor can pay $ 2 for every $ 100 of his investment.

The configuration of the system of the present invention is based on access to or use of the system (such as $ 5 per month), as opposed to securities orders entering the system, such as general brokerage operations. Make it possible. As a result, investors cost-effective a portfolio of securities consisting of directly owned individual securities that have attributes similar to mutual funds such as diversification, but have advantages over mutual funds such as tax profits. It is possible to build a mutual fund.

The basic purpose and embodied principle theme in the computer-based system of the present invention is to allow investors to invest in assets that can be traded as a portfolio instead of collecting individual assets. In other words, as portfolio theory teaches, the value of an asset to a portfolio is different from the value of the asset by itself. Therefore, the computer-based system of the present invention enables an investor to make an investment decision based on the effect of the investor's portfolio and to build and maintain a diversified portfolio.

Compared to the fund, the computer-based system of the present invention specifically provides: 1. Full control for investors on what securities to choose from and how to weight and monetize them. 2. Control over the tax effect of buying and selling securities in the portfolio so as to prevent investors from being given unnecessary taxable income based on the fund manager's discretionary selling transactions. 3. All the information needed to monitor and manage tax effects, and the ability to buy and sell individual securities in a person's portfolio to obtain the desired tax benefits. 4. Shareholders' rights to each security in the portfolio to investors, and full ownership and control over all investments, votes and other decisions regarding such securities. 5. Direct control over the fees and expenses you may incur. 6. If desired, the possibility of investors making investment decisions that occur in numerous days. 7. Control the portfolio and all elements of their modifications to suit the investor.

In addition, the computer-based system of the present invention, as compared to current brokerage services, 1 (a) The system centralizes the order flow, limits the number of actual transactions that need to be made outside the system, and directs investors to identify securities to further centralize the order flow. And since the input process is automated, the cost is reduced. (Therefore, the system charges to investors for building portfolios are much lower than deep discount or non-discount brokers, respectively-one or two orders are also smaller.) And (b) Included in a diversified portfolio by having investors do everything to build and manage a diversified portfolio and provide the methods and equipment needed to build and manage such a portfolio. Allows investors to choose individual securities that reflect his preferences.

Further, the computer-based system of the present invention is 2. Allows investors to obtain small fractional shares, thereby allowing a diversified portfolio but smaller cost-effective construction and maintenance. As a result, the computer-based system of the present invention builds a portfolio of diversified securities (or other assets or liabilities), even for very small investors, in any quantity, even if all stocks are fractional. Can own.

The computer-based system of the present invention allows investors to buy and sell shares in small units-even fractions-at no additional cost. It is, according to one embodiment of the computer-based system of the present invention, that the system aggregates orders provided by the investor, executes the aggregated transaction, and retrieves (or sells) to the investor's account. (Cash for) Allocate shares. (Since transactions outside this system still have to be done in full stock volume, odd share volumes may remain after allocation. For example, a total shareholding of 7 and 1/2 shares is 1 /. With an equity allocation of 2, it can be allocated to 15 different accounts. To validate this transaction, if shares are acquired from an external system, the broker operating this system will acquire 8 equity. The remaining half of the shares will be owned by the broker or a third party worker who has a broker operating this system and will be held for the allocation required in the next round of trading). Therefore, an investor invests $ 150 each week in 50 shares and is allocated to his odd-lot account. Next week we will add an additional fractional share of each of these shares to that person's account. For example, about $ 7,800 is invested throughout the year, and investors have full and odd shares in their account (if the average stock price was $ 30, investors would have a little more than an average of 5 shares in each of the 50 shares. -To be exact 5. 2 shares-would have gotten). The system of the present invention allows full investment each week (or desired period) in a diversified portfolio, trading small equity interests, and fractional equity (none of which is possible on a cost-effective basis in ordinary brokerage operations). To. According to another embodiment of the computer-based system of the present invention, the system is such that the broker maintains the position of the security and, in principle, the investor's order is executed by the broker or a third party. Can be maintained by. And it essentially aggregates the investor's orders as transactions on the other side of the broker. On a regular basis, a broker may execute an offsetting transaction in the market if the broker does not want to have that position.

3. Allows you to select individual securities that reflect the preferences contained within a diversified portfolio, and provides the information and tools needed to build this type of low-cost portfolio. Tools include "pre-packaged" or "celebrity" or other selected portfolios that can be further modified by the investor, or portfolios that reflect the portfolio characteristics of a particular affinity group or other selected investor. be able to.

4. Transaction costs can be reduced by accepting incoming customer orders at any time and aggregating them for trading. The computer-based system of the present invention can be used, for example, at least three times daily (close for orders received after the end of the previous business, daytime for orders received in the morning, and all received in the afternoon. Hold the order until a certain time (except for those that the customer requires immediate execution), "close" for the order. Many orders traded are generally unrestricted and depend to some extent on the number of investors and the degree of risk or principal positioning accepted by the broker. The computer-based system of the present invention handles all orders placed therein. And to reduce the number of transactions that had to be executed at a particular time, these orders are aggregated, thereby reducing transaction costs and providing profits to investors.

5. Enables good transaction execution of orders through deduction calculation. Further, the computer-based system of the present invention includes the function of a deduction calculation order for each of the other orders. The remaining orders that could not be matched are executed internally (to the extent that the system creates a market for the securities being traded) or executed against a third party execution system (such as an exchange or market maker). ..

6. Monitor the portfolio based on tax effects. In contrast to the prior art, an important concept of the computer-based system of the present invention relates to the construction of a portfolio. In this sense, monitoring the portfolio for tax effects is related to the historical performance of the transaction, and portfolio monitoring is part of the system. Therefore, the computer-based system of the present invention can trace the acquisition date of each security in the base and portfolio and use that base to determine the tax effect for the individual security and portfolio at any time as a whole. be able to.

7. Support the enforcement of shareholders' rights. Since the computer-based system of the present invention is designed to assist with the portfolio, it includes the enforcement of shareholder rights with respect to the portfolio securities, and the computer-based system of the present invention not only executes their orders but also theirs. Give investors support in the form of aggregating voting rights or other rights. Therefore, the service of analyzing securities in a portfolio gives investors information about how the securities are voted in relation to the portfolio. Investors will be able to order that voting be delegated to such services (or other services if more than one is available).

8. Portfolio parameters can be constructed. The portfolio is determined by the plan sponsor or others, as the computer-based system of the present invention is designed to assist in the construction of a portfolio containing individual securities as opposed to acquisition as individual securities. There may be restrictions imposed on them in order to promote "informed" or "reasonable" investments made. Such parameters, for example, make the portfolio diversified and not too risky (in other words, have no account greater than 5% of the value of the portfolio, and the overall risk in the portfolio is the S &amp; P 500. You must have a minimum number of sets of shares that meet certain criteria, such as 30 shares, so as not to exceed a certain amount, such as 110% of the risk level.)

System overview A block diagram of the process flow according to an exemplary embodiment of the computer-based system of the present invention is shown in FIG. System 10 includes asset allocation model 1, portfolio selection editor 2, web server 3 with storage device 4, database 6 of tradable assets or liabilities, third-party trading system 5 combined with clearing house 8, third-party payments. It has a payment system 7. Information is provided to the computer-based system 10 by investors via a graphical investor interface, which is shown in two parts in Figure 1 as Asset Allocation Model 1 and Portfolio Selection Editor 2.

In Asset Allocation Model 1, the investor first considers the investor data (eg, name, address, payment settlement information, etc.), the investor's risk tolerance and financial goals and objectives, the investor's current assets and liabilities, Investor's current and expected income and current and expected spending and time frame (eg 10-15 years of child education, 5-10 years of parental care), investor's favorable risk / return Asked to answer a series of questions that determine characteristics, investor preferences for a mix of different types of securities and preferred portfolios, and various other matters. There are different output changes for the asset allocation model. One formula is the amount to invest in long-term, medium-term, and short-term investments. The asset allocation model is to determine the ratio of allocation to each of the common types of investment with a set of known tables. There are many asset allocation models, all of which are Quicken TM, Mentum Investment from The Mentumn Corporation and perhaps Financial Engines (www.financialengines.com). It can be employed in the present invention as provided by TM.

An exemplary questionnaire used to enter into any of the above asset allocation models is shown in Figure 2. Figure 3 shows an exemplary output of such an asset allocation model.

Investors can enter the system in various situations, but not all questions need to be answered. For example, an investor can start from scratch and represent all the basic information about age, income, debt, financial goals, and more. In that case, the computer-based systems of the invention generally combine known publicly available asset allocation models , or combinations of such models, with short-term liquid investments (such as money market funds, or short-term government or investment-qualified bonds). Used to provide investors with information about the percentage of investable assets that should be allocated to medium-term investments, such as medium-term bonds, and long-term investments (such as equity interests, private placement bonds, etc.).

Once the percentage of this allocation is determined, the system allows investors to select a portfolio of tradable assets or liabilities as follows: This choice includes providing investors with a historical view of the risk levels and returns of tradable assets or liabilities, among other things, as a portfolio investment.

Once an investor has selected a desired portfolio based on his various preferences for a particular asset or liability to be included in the portfolio, that portfolio is necessary to achieve the investor's stated financial goals. It can include different, past and expected levels of returns. Accordingly, the present invention provides an investor with an indication that these choices require a change in either the investor's particular asset / liability preferences or the allocation ratio to reach that person's investment objectives. The system uses known probabilistic methods, including value-at-risk and sensitivity analysis, to set the historical and expected return rates of an investor's portfolio against the expected return rates in the asset allocation model. Do this by comparison, and if it determines that there is a difference, suggest adjusting the allocation ratio to correct the difference so that the desired financial target can be achieved within the limits set by the investor. To do. Unless these goals are met, the invention informs the investor that the return level of risk is not sufficient to reach the set goals. In addition, the system tells investors what is needed to achieve the various financial goals modified to account for the return and level of investment provided to the system. Provide further information.

In addition, the asset allocation model used utilizes probabilistic assessments and estimates of the likelihood that these goals will be achieved subject to various asset allocations. As mentioned above, if the investor steps through a series of inquiries and inquiries by the asset allocation model, it is optional, but as an input to the investor in the next stage, that is, building a specific portfolio. The output to be used is provided.

One feature of the invention is demonstrated by differentiating the normal use of asset allocation models, even when investors take advantage of stochastic returns such as financial engines. Under the present invention, the quantity to be allocated to various asset classes is notified, and is dynamically adjusted not only by investor demographics but also by information such as investor preferences and assets and burden / income / expenditure. To. As an example, take the example of two investors. They assume that their assets and income and expected income from their work are the same in all respects, except for risk tolerance and preferences, such as their debt and expected spending, financial goals for retirement, etc. One investor is risk averse to risk and the other is risk averse to risk. A typical asset allocation model would direct each to an equivalent allocation. Adding probabilistic determinants of the performance of different assets, such as different asset classes or mutual funds, simply allows for subtle adjustments and more accurate use of the asset allocation model. In other words, if the determinant invests in a fund that provides equity-level returns, then such invested funds are actually expected to have such returns. General asset allocation or specific asset allocation may produce comparable results, because what assets satisfy the investor's goals with respect to the investor's goals and the probabilistic return of the allocation. Because it uses information about the investor's goals to reach the model of what is needed for. It does not use the investor's own risk tolerance in a dynamic way to adjust the asset allocation model. But for example, in order to reach a particular financial goal, it is necessary to make some significant allocations of equity, and risk-averse investors may invest in stocks with normal market risk. The allocations that investors will make and the adjustments to the actual equity portfolio are important because they are not happy or disliked. In other words, non-risk-averse investors, for example, in the money market or short-term investments For risk-averse investors, what is expected if you have one-sixth of your investable assets, one-third of high-risk equities, and one-half of your medium-term investments? Conversely, it would be necessary to have a portfolio with a higher number of low-risk stocks, which would satisfy both his financial goals and his perception of risk. Thus, the systems of the invention are among a particular portfolio of optimal equity interests for investors who dynamically consider actual risk preferences as opposed to the investor's financial goals and related factors. With a typical asset allocation model that simply provides an allocation to an "equity" or "fund" and finds an equity or fund that meets the average determined by the model without allowing the classification or construction and execution of Unlike, it provides an asset allocation model with preference information for additional risks that are accurately affected through the portfolio allocation of a particular securities.

Despite these potential benefits, investors can completely skip the part of the interface involved in their asset allocation decisions, and investors want to invest in equities and have already presented their preferences. By stating that you want to build a portfolio based on, you can move to building a portfolio directly. In this case, the investor who wants to start with the asset allocation decision enters these preferences, but instead of trying to explore the allocation, the investor enters those preferences, or the investor. However, some other portfolios that build a starting point, such as pre-packaged portfolios, portfolios among celebrities, portfolios by affinity groups, or investor risks and returns, as usually presented by investors. You can choose from portfolios proposed and recommended by the system based on your preference. Portfolios can be securities based on type of business or industry, equity volatility, capital stock, inclusion of various indices, book price rate of return or other financial criteria, corporate governance, or other matters. Screen for choices. Other portfolio-building starting points are various indices (or subsets of different indices that generally reflect the risk-return characteristics of the index), of 10 equities in the below-average Dow Jones Industrial Index during the last year. Includes recommendations from investment magazines or newsletters or other sources, such as various strategies, or other strategies embodied in various unit mutual funds, or a portfolio of celebrities reflecting a portfolio of celebrities or analysts. Portfolio, or 200, Portfolio of over $ 000 income managers, securities lawyers living in Washington, DC, Silicon Valley technicians, commercial bank executives or other groups (all with statistics and promises to protect privacy) It consists of portfolios that reflect risk-return characteristics screened from various investor-built affinity groups, such as characteristics. Illustrative screens for entering criteria for selecting securities in a portfolio are shown in Figures 4A and 4B.

Figure 5 shows an exemplary output of selection, where each of the 40 securities is equally weighted with a portfolio of dollars invested in each security, and such an exemplary portfolio is pre-existing, such as book value, etc. Obtained through investor screening as part of screening selection criteria based on what has been modified by the investor, such as the package portfolio, affinity group portfolio, etc. Other variations are possible, depending on the price of the underlying securities, the total number of securities available, and the merged risk factors desired for all portfolios, etc.

To complete this selection, the portfolio editor accesses web server 3 and then stock equity and fixed income database 6. This database is regularly updated with information such as price, capital stock, price-earnings ratio, etc. transmitted from various well-known stock information services. Each of these elements is associated with the security. If the investor specifies the criteria for his portfolio, each of the relevant elements for each security in the database is compared to the criteria and, if consistent with them, the security is included or excluded from the portfolio based on the particular criteria. Will be done.

As an example, investors would like to invest only in large capital ratios, software-related industries, and the US-based financial services and entertainment industries without negative corporate governance factors. The system then returns a list of familiar company names and unfamiliar ones. The system then identifies the percentage of each stock to allocate to the portfolio to ensure a reasonable level of diversification (and warns investors if that is not done). In one embodiment, for example, showing the investor that a reasonable level of diversification would not necessarily be achieved if it was less than 20 securities, invested by the number of securities that met the criteria entered by the investor. Divide the overall amount given and assign an equal amount or a capitalized weighted amount to each of the securities. Moreover, it should be noted that other levels of rationalization are used as well.

In addition, the system identifies the risk level of the portfolio and proposes changes to satisfy investor preferences. As an example, if there are insufficient companies on the above list, the system includes industries such as telecommunications, which either loosen the standard of capital stock or appear to resemble the non-manufacturing industry selected by investors. Propose.

In connection with some of these screens, the investor is provided with a response, graphically and / or in text and / or in number of indications, to indicate to the investor the result of the investor's choice. Investor. An exemplary portfolio is shown in Figure 5. The results include the inherent risks of history in selected portfolios related to well-known standards such as the S &amp; P 500 and the risks in terms of principal, etc. lost over a particular time period or a particular relational expression. Includes comparison.

The investor then identifies the amount to be invested in this portfolio. Investor orders are collected along with other investor orders (or brokers become aggregates by executing orders and taking positions in stocks). In order to purchase the identified portfolio, the investor must have assets on hand or have a credit facility to obtain securities, which are directly deposited into the system, activate the system. Arrange through a variety of mechanisms, including check transfer or electronic transfer (EFT) to a broker, arranging credit, or holding cash or other securities for the sale of assets on hand from a previous transaction. it can. These systems, including third parties, are illustrated as third party payment settlement systems 7. One of the options offered by the system is a money market fund with surplus funds, a linked debit card, a credit card, a check-issuing mechanism that returns funds to an investor's account, and other regular cash management services. Is similar to.

The system, such as when it reaches a certain market exposure, to build a particular portfolio for investors (such as when a security or a collection of securities in a portfolio is in a long position of $ 10,000 or more). At the discretion of the system operator (the broker or bank that operates the system) or at a set time, such as three times a day), perform the required transactions electrically in the next trading window. This transaction is carried out in two steps. The first is that all investor orders are collected within System 10 (so that the system operator pre-aggregates some orders from the standpoint of the parties and executes all orders under $ 1000 on its own) 1 (Aggregate these orders as one larger order), and again in System 10 the deduction calculation to comply with the applicable regulations. And if the system belongs to a broker who does not market securities, surplus transactions are sent electronically to a third party trading system, such as Optimark. If the system belongs to a broker that market-makes securities, the broker directly executes surplus transactions. The construction and execution of this portfolio involves aggregating customized orders for individual securities to smaller investors in relation to the transaction (whether or not there is a broker to pre-aggregate). And with or without deductions, in other words, the ability of investors to actually influence trading and build and manage a portfolio of securities allows investors to make choices and investments using regular brokerage or mutual funds. And can be used to advantage over systems for monitoring securities or fund portfolios.

The computer-based system of the present invention can allocate the holding ratio proposed to investors in order to build a diversified portfolio (including fractional equity interests in shares). The portfolio constructed by the computer-based system according to the present invention provides investors with the convenience of modern portfolio management theory, using a system that allows the construction and maintenance of the portfolio at a reasonable cost given the size of the portfolio. I do.

Additional funds will be used to purchase additional shares or increase the quantity of existing shares in the portfolio, but such additional funds will be automatically deducted from the checking account or, for example, in large numbers during the day. It can also be funded by selling all or part of the portfolio. If, for example, an investor wants to add or sell a particular stock for tax purposes such that the investor wants to gain a tax loss, the system will notify the investor's effect on changes in portfolio diversification and risk levels, etc. .. But (for example, if there are no restrictions imposed by the employer), the investor has full control, and if desired, directs the system or allows the portfolio after the sale of equity to do so. If you choose to give instructions, you can also build a fully non-diversified portfolio with only one or a few shares. In addition, any preference identified by the investor can be adjusted multiple times during the day. If the investor changes his or her preferences, the system reviews the investor's current holdings, reflects the new preferences, including any changes, and changes to maintain the desired risk / return level. Propose. Similarly, if the securities in the portfolio change in reality (eg, a company is acquired and monetized), the system proposes changes, even if investor preferences do not change.

The system is accessed by the investor from a remote mainframe or server via an intermediary such as a bank or broker, with the investor using a direct dial connection or the Internet, or the invention is an investment. Mounted on a part of the home computer and linked to a distant site via either means of access to provide the information investors need to obtain specific information and execute transactions. .. In other words, many processes are completed "offline" with the connection to the server, and the server is required only to obtain updated data, or to send orders for portfolio modifications, or the present invention. Is completed "online" depending on how much is done with the address on the investor's computer.

Overall system FIG. 6 depicts a typical block diagram of the computer-based system of the present invention. FIG. 6 depicts an investor's computer 11a connected to a communication network 12 such as the Internet, which is further on a web server 14 that stores a main program for controlling transactions and investor access. Be connected. In this drawing, two other investor computers 11b, 11c are also connected to the web server 14 via the internet 12. Also shown is the investor's computer 11d, which is directly connected to the web server 14 via a dial-up connection. Finally, an investor's computer 11e connected via an intermediary 13 such as a bank or broker or a financial planner providing a system as a customer service is also shown, which computer 11e may also be directly or on the internet. Connected to the web server 14 via 12.

The web server 14 is for conducting transactions made outside the computer-based system of the present invention through various known standard interfaces, such as the Financial Information eXchange (FIX) protocol. Electrically connected to traders and other investors. Some or almost all of the programs that implement the methods of the invention require the investor's computer 11a to access the web server 14 to provide instructions for the investor to keep up to date and execute transactions. Can be left unique to ~ 11e.

Graphical user interface program flow Figure 7 depicts one possible flow chart of the graphical user interface presented to the investor in building or modifying the investor's portfolio.

Screen 1 (22) pulls out investor identification information to allow logon (eg, investor name, password and other trusted information for security purposes). Investors are allowed several secure mechanisms to provide credit cards and other information to the system. However, in one embodiment (FIG. 17), the investor 171 who first accesses the system 173 via the Internet 172 does not provide any sensitive information such as credit card information to the processing site. Provide password and logon identification. In contrast, the site calls the investor again with the number given by the investor 174, that is, the investor can access the site directly via the telephone. The investor may then provide the processing site with the required information through the site's assigned password and the touchtone input of the investor's confidential credit card information 175. Once the site has credit card information via a direct telephone connection, that information does not need to be provided to the site again, and the investor is required to provide the investor's site with a given password and logon status for communication. You will use the proof. These passwords and logon proofs are of no use for any purpose other than communicating with the site, and credit card information is never transmitted over the Internet.

Once the investor has entered the appropriate information, the program moves to screen 2 (23).

Screen 2 (23) provides the first instruction for new investors via the system. The screens for existing investors are a bit different, however, the overall flow is the same. The information provided is a set of educational facts that links to other sites (such as academic magazines and books used for investment or research mailed to the site, or other services including email). including. Investors can bypass this screen in future executions of the program by selecting a switch to avoid the program from stopping this screen. In any case, the program flow proceeds to screen 3 (24).

Screen 3 (24) shows a list of options for investors (eg, creating a new account, offering preferences, changing preferences in an existing portfolio, buying or selling certain securities, wired transmission or other Providing orders, valuing or planning taxes, monitoring price transitions in a portfolio, averaging amounts or calculating weekly inflows and outflows to a portfolio for other purposes). Investors also offer options for navigating through the site and, if the investor wants (and an experienced investor would want) to skip successive screens. Then, the program flow proceeds to screen 4 (25).

Screen 4 (25) creates an asset allocation model for the investor (only if the investor wants, and some investors may skip this) from the investor information (see Figure 2). To do. In general, asset allocation models help investors determine their current investment allocation based on other factors such as current assets and debt, current income, future needs and age. In general, the model determines how much to invest in equity interests, bonds and cash to reach the investor's goals in the time left. There are many publicly available investment allocation models. For example, Quicken (registered trademark) includes it as part of some financial planning software. The Wall Street Journal offers it as part of a booking offer. One or the other of these can be used to create an asset allocation model based on investor input.

If the investor has already entered this information (for example, the investor already has an account in the system), the existing information will be displayed. This screen is used to obtain basic information, including the systems used by the investor, such as conformance for certain types of investments, and also in various federal and state laws by the investor. Used to ensure compliance with various legal requirements, including determining eligibility as a "certified investor" or "qualified investor)". To become a certified or qualified investor, an investor must meet certain criteria. Once the investor enters this information, the system verifies that this information is correct in the usual way.

Screen 4 (25) draws information from the investor that is used to create a risk-return preference function for the investor. Such information includes the level of volatility, risk, required rate of return (based on the asset allocation model above), etc. The use of various parameters to establish functionality is used to set initial defaults. This initial default can be changed if the investor so desires on screen 5 (26). Then, the program flow proceeds to screen 5 (26).

Screen 5 (26) provides a screen that displays a menu of preferences to set for new investors, i.e. existing investors who want to change their portfolio and change their preferences (eg). As shown in Figure 4). The menu, in other matters (and changes many times as an investor's choice), is the type of security by market capitalization, market price relative to book price, price-earnings ratio, stock price, geographical sector. , Product sector, dividends paid, past prices relative to current prices, income growth and similar economic factors, as well as specific business lines (eg, tobacco, controlled healthcare, or controversy or interest). Non-economic factors such as defenses that may appear to be), in particular state-related businesses (such as Burma, the People's Republic of China or Northern Ireland, and companies selected in these countries. Ratings from third-party sources of how they work), for preference for administrative compensation and other organizational control factors that are rationalized by third parties, etc. Includes a list. Depending on the factors that the investor chooses on this screen depending on their interests, the investor may make other choices, for example, through a drop-down menu or supplementary screen that examines the details of the choice and the additional choices solicited. Is displayed. For example, when an investor chooses market capitalization as a factor in selecting stocks in a portfolio, the drop-down menu shows that the investor has a variety of capitalizations (eg, less than $ 25 million, $ 25 million). ~ $ 100 million, $ 100 million ~ $ 500 million, $ 500 million ~ $ 1 billion, $ 1 billion ~ $ 2.5 billion, $ 2.5 billion ~ $ 5 billion, $ 5 billion ~ $ 10 billion, or $ 10 billion It is possible to select (8 categories such as market value above) can be selected, which can be selected by pointing and clicking the mouse. If the investor wants to obtain more information, such as a sample of companies within each category, the investor should select "More Information" or a similar box. become. The investor is then presented with a screen that provides the additional details requested.

When the drop-down box or screen exits, the investor returns to the initial screen or another screen that is part of screen 5 (26), and parameters for other factors due to the investor's preference. Repeat the procedure for setting.

Alternatively or additionally, with reference to FIG. 4B, the computer-based system of the present invention is selected from the Dow Jones Industrial Average, prominent analysts, magazines and other publications, or selected. Investors with proposed portfolios built from other means, such as recommended preferences that reflect a specified policy, such as 10 times in stock trading, either from an organization or through a collaborative approach. Allows to be displayed. As shown in Figure 4B, the investor can choose from the categories of portfolios 71-76, and in each category the investor can choose a special type of portfolio in that category. For example, an investor can select an average portfolio of people with the same number of children as an investor by selecting "Similar Demographics" 74 and "Number of Children" 77.

As a further example, a prominent analyst declares that his ideal portfolio is the following 50 shares in the following proportions, giving what the magazine has chosen as the "ideal portfolio", or charity. The organization may provide a list of the companies that have done the most charity, and we hope that individual charity donors will create a portfolio of corporate donors and believe that the labor union is a good company to work for. It may provide a list of companies and recommend members who obtain shares in those companies. In any of these cases, Screen 5 is pre-provided according to the list of companies and the proposed allocation (ie, if the allocation is not provided by the actually created list, according to the appropriate variety of requirements). Make available to such investor risks and other preferences). In addition, the computer-based system of the present invention already has the investor preferences entered into the system, so that it automatically firefly network system (Firefly Network System:). Use known collaborative filtering techniques such as www.firefly.net). In this case, the investor preferences entered into the system are used to identify securities that may be of interest to investors who have been clearly identified by other investors with similar preferences. All portfolios can be displayed. For example, if an investor who enters a preference for a particular class of stock decides to buy another given share separately, then the other investor has the same preference as the first investor. When entering, the second investor may be notified that an investor with similar preferences has added specifically to buy other securities, and the second investor will add as well. You may want to consider it. In this way, the system of the invention can be used to facilitate the construction of diverse portfolios built by the equivalent of investment clubs.

In either of these pre-packages, analysts, or groups or collaborative recommendations, the investor will select the entire portfolio as described and will be invested as shown in screen 8 (29). You can specify the amount. (That is, if the investor has additional securities to include, the investor can continue through the program flow, or by removing the tobacco stock from the portfolio or by screen 7 (28) shown below. ) By changing the weighting of securities in the portfolio as described in the program flow, the investor can remove certain securities from the proposed portfolio.) Therefore, one of the investor's preferences and The screens available to investors are the proposed portfolios that represent the strategy of the pre-packaged portfolio, namely the selection of recommendations by a special analyst, group or others. Then, the program flow proceeds to screen 6 (27).

In each case and on each of these screens, the investor has a default preference set that the system recommends based on general goals in line with the investor's condition and the investor information entered on previous screens. Given. For example, if an investor wants a portfolio with very low risk, yet has a high dividend and exclusively chooses to invest less than $ 25 million, the system is reasonably diverse. It warns investors of the fact that there are not enough companies to satisfy these preferences for building a formalized portfolio. The system then recommends to the system how much investment to choose from, or allows the investor to change some of the other parameters that force the choice, such as the dividend amount. suggest.

Due to those factors and parameters that the investor does not want to choose, the system uses the defaults to create a preference that meets any other criteria chosen by the investor. If no factors and parameters are selected, the system creates default preferences based on asset allocation, risk / return preferences and other information such as age and income, and the default preferences are from the system to investors. Provided. The number of different portfolios that the system can build is very large (almost unlimited and in any case well above the number of potential investors), and two investors have exactly the same portfolio. I can't think of having one. (However, they do so (when family members want to have the same portfolio in separate accounts, or each person wants to have multiple accounts (such as IRA and non-IRA accounts). Sometimes, or when two people happen to make the same choice on all parameters, and even when they are of the same age and range of income and all defaults are used, etc., each person may have the same portfolio. In particular, the system is interactively connected to the investor and the investor program running on the investor's computer via the main server. The investor's program is the information required by the main server. Encourages investors to determine portfolios or investment allocation models for, however, some of these choices made by investors achieve the investment goals they desire to limit volatility. It can affect the investment allocation model that can generate programs that show that the allocation of legitimate financial resources must be increased in order to do so. Therefore, the above process can be considered as a two-step process, the first The first step is to determine the investment allocation model, and the second step is to give investors the choice of securities they need in their portfolio, i.e. the general categories of investment instruments and often their interrelationships. Allows a single interactive process while selecting both statements of an investment goal. If (the guarantor of the plan or possibly the employer, or the investor himself or the investor is ex officio (that is, the corporate account or parameters are fully set by one person and the actual trading and execution options are If restrictions are imposed (by other accounts) if they have (made by others), the restrictions will be revealed on these screens and instruct investors to make choices in accordance with those restrictions. ..

Then, screen 6 (27) displays the investor together with the investor's own selection and searches for confirmation of that selection. If the investor wishes to change any of its choices, he returns the investor to the appropriate front screen (such as screen 4 (25) or screen 5 (26) depending on the parameters to be changed). If the investor confirms the selection, the investor moves to screen 7 (28) displaying the portfolio. Then, the program flow proceeds to screen 7 (28).

Screen 7 (28) provides the investor with the selected portfolio (see Figure 5 for an example). Portfolios can be viewed in several different formats by investors. These formats are due to the format of the securities selected (whose ratio is within one range of market capitalization to the other) and various other factors that reflect common factors that may be selected by the investor. , And the list of actual stocks that may be included, depending on the overall risk and portfolio performance, the portfolio and risk that each stock (see below) is relative to the average (by expected dollar allocation). Includes relative proportions to be prepared (see note below).

Both risk and performance are based on past equity activity and are shown graphically along with the portfolio. According to the volatility chart, this portfolio will further say, "From past performance, this portfolio will lose or gain 10% of its value against a" specific "index on 5 out of 100 trading days." The risk is greater than the specified mean, as indicated by the word. The portfolio can also be presented as an estimate in monetary terms based on historical returns and volatility, along with probability and sensitivity analyzes performed. The output is either the expected distribution of this value (much similar to the bell-shaped curve representing the mean expected value and the tail showing high and low expected values at a particular level of probability), or "this portfolio doubles in 10 years. It can be a graph showing a certain number, such as "It is expected to be, but there is a 5% chance that it will be 60% or less of its current value in 10 years."

If the portfolio is presented as a list of securities to be included in the portfolio, the risks to each such security are graphically indicated, for example, by one color or by the next bar of the stock. As an example, this bar is shaded with one color (eg yellow) for stocks with higher risk than average and another color (eg blue) for stocks with lower risk than average. (See, eg, Figure 13), or extend the bar to the right of each of the listed stocks for the less risky stocks, and further to the left of each of the higher risk stocks. .. The longer the bar, the farther away from the average. Investors who want to raise the risk level next in the portfolio will either return to the screen where the risk level is set to the result that the portfolio will be readjusted to a more risky one, or raise the risk level. Increase the risk level by selecting contributing shares and increasing the allocation of those shares, or by identifying that margin should be used (in other words, the investor may borrow from the intermediary who operates the system or Requesting another source to acquire leveraged securities), thereby increasing the risk level of the portfolio. In addition, if the investor wants the portfolio to have a risk level similar to that of another portfolio, such as the investor's favorite fund, or the portfolio is better than the fund or other portfolio. Other devices described here to enter the desired risk level into the system, or on the dial, or to identify the overall risk level of the portfolio, if you also wish to make it somewhat riskier. By changing the position of the pointer above, the investor is given the opportunity to identify the desired detailed risk level.

More generally, at this point, investors may by increasing or decreasing the selection of a particular stock, or by adding a stock that is not in its portfolio and identifying the percentage allocated to that stock. You can manually adjust your portfolio in a way that suits him.

If the price moves significantly above its current value at the time of execution (assuming the system operator does not execute the order immediately and the risk of price fluctuations is a pre-aggregated value), some or all stocks Investors are given the opportunity to identify whether or not they should buy. The program flow then proceeds to screen 8 (29).

Screen 8 (29) provides the investor with a final confirmation of the portfolio and asks the investor how much to invest in this portfolio. The exact amount to buy a particular stock is not known until the time of purchase (assuming the system operator does not execute the order immediately and the risk of price fluctuations is a pre-aggregated value), so the particular portfolio The number of specified shares to be allocated to is to some extent estimated in order to adapt to price fluctuations prior to the execution of the transaction. With this note, the portfolio allocation and the specific securities to be purchased next are stored in storage on the investor's computer and stored there as well as transferred to the main server, or in one location. It will be saved. The exact number of shares to be purchased and distributed to the investor will be determined in the next trading window as if they were purchased against the investor's account, based on the current price for that share. Will be done. The portfolio is then updated and saved by the system for access the next time this investor logs on to the system.

Figure 8 shows one possible flow chart of a graphical investor interface provided to an investor in relation to an investor who uses other features of the system.

Screens 1, 2 and 3 (32a, 32b, 32c) display a menu as soon as the investor logs on, thereby skipping directly to another screen without going through screens 2 (32b) and 3 (32c). It is the same as that shown in FIG. 7, except that it makes it possible. In other words, the selection on screen 3 (32c) is shown as a "toolbar" when logged on, giving investors direct access to this toolbar to navigate to other screens in the system. After screen 2 (32a-32c), the program flow proceeds to screen 4 (33).

Select screen 4 (33) (ie, the first screen the investor sees after logging on, assuming the investor has selected an option other than "Build or Modify Portfolio" from the "Screen 3 Equivalent Toolbar"). Provide a possible service menu. These services vary and depend to some extent on investors. For example, the provision of securities in private placement can only be legally carried out to "authorized investors". Therefore, the system identifies licensed investors and provides them with menu items to review private placement opportunities. On the contrary, the system does not offer such menu items to unlicensed investors who cannot receive such offers under current law. The program flow then proceeds to screen 5 (34).

Screen 5 (34) is an operation screen for the service selected by the investor. If, for example, an investor wants to value the portfolio for tax effects, Screen 5 (34) allows him to do so. In the tax effect communication menu, investors can select relevant parameters from what is available, such as stocks with losses, stocks with profits, long-term vs. short-term profits or losses, parameter combinations or all current tax positions. Identify. The system then displays to the investor the position of the stock that satisfies the investor's parameters at the listed amount. Investors on the same stock because of the system behavior that allows them to frequently add amounts to the portfolio, for example for strategies such as dollar cost averaging, and for frequent adjustments to the portfolio securities themselves. It is possible to make a profit and loss (for example, an investor buys 10 shares of a share for $ 20 per share, and then 10 shares of the same share for $ 30 per share, and that share is currently 25. If traded in dollars, the investor has a profit and a loss in that stock if each trade is viewed separately). In this case, the system presents the stock as having both profits and losses. The investor is then presented with a set of options as to what he should do next. These options are smart options and context sensitive, so investors, for example, by highlighting those securities in the list and clicking on commands such as "Sell at next portfolio adjustment". You can easily sell individual securities. This transaction is then added to the portfolio as an adjustment and executed in the next trading window. If an investor wants to sell immediately, he highlights the security and clicks "Sell Immediately" (a surcharge will be levied on this). In both cases, the confirmation window pops up a confirmation of the investor's choice at this point, or

The computer-based system of the present invention provides tax filing preparation because taxes are related to transactions arising through the present invention. In particular, as required to provide profit and loss information as described above, the computer-based system of the present invention provides tax-based information (including the date of acquisition) and portfolio of securities purchased through this system. Track the selling price and for such securities as well as all costs required to manage. As a result, the system that enforces the computer-based system of the present invention provides investors with a complete Form 1040 Schedule D that can be downloaded because it involves transactions within the system. This Schedule can supplement other capital transactions that investors may have. Similarly, the system provides a one-step export of this Schedule D type information to popular tax return filing packages, such as Turbo TaxTM. This download and export allows investors to use the system with a low level of inconvenience.

On screen 4 (33) the investor reviews other services, eg private offerings if the investor is a licensed investor, or reviews public offerings, or buys or sells certain securities outside the portfolio. Choose to buy or sell other economic services such as insurance, goods, futures or non-economic services such as books or software related to investment where permitted by applicable law. Or if the investor wants to discuss activities in the chat room or selected companies such that this system hosts conversations with company executives, the investor will be through screen 5 (34). You can go into other services like this.

If an investor allows, the system can rely on the information provided by the investor in a more aggressive way, along the lines above, to offer that investor another potential for profit. .. For example, if an investor is a licensed investor and identifies profits in a private placement, including an internet-based publisher, the system will specifically notice her the existence of such an offer the next time the investor logs on. And provide a means for investors to get the information they need to participate.

Investors are in a position to move between operation screens and are involved in various activities as described above. The program flow then proceeds to screen 6 (35).

Screen 6 (35) lists the actions that the investor has decided to take on screen 5 (34), as long as the action requires some kind of transaction, and then asks for confirmation of that action. If the investor wants to modify his behavior, he goes back to screen 5 (34) to make adjustments. After confirmation, all transactions will be valid. The system processes and stores the information if it is relevant to the transaction or requires portfolio adjustments, etc.

Web server program 9 and 10 together with FIGS. 11 and 12 show a flowchart of the processing that occurs in the web server. Typically, a web server provides communication between all investors and other systems outside the computer-based system of the invention, such as third party payment systems and third party trading systems.

Figures 9 and 10 show one of the enormous advantages of the computer-based system of the present invention, that is, the advantage of dramatically reducing the number of transactions that must be executed outside the system to perform portfolio adjustments. .. As shown in Figure 11, if Investor A wants to buy 100 shares of Securities A, Investor B wants to sell 50 shares of Securities A, and Investor C wants to buy 150 shares of Securities A, then this Through the system of the invention, a total of 250 shares of Securities A will be purchased and 50 shares of Securities A will be sold. The result of the deduction calculation is that it is necessary to purchase 200 shares of security A by the system of the present invention, which can be executed by a single transaction.

Similarly, as shown in Figure 12, Investor A wants to buy 200 shares of Securities B, Investor B wants to sell 50 shares of Securities B, and Investor C wants to sell 150 shares of Securities B. If so, a total of 200 shares of securities B will be purchased and 200 shares of securities B will be sold through the system of the present invention. The result of the deduction transaction is the purchase or sale of 0 shares of security B by the system of the present invention.

As further shown in Figure 11, Investor A wants to buy 100 shares of Securities C, Investor B wants to sell 100 shares of Securities C, and Investor C wants to sell 50 shares of Securities C. As a result, a total of 100 shares of securities C will be purchased through the system of the present invention, and 150 shares of securities C will be sold. As a result of the deduction transaction, 50 shares of Securities C need to be sold by the system of the present invention, and again, only one transaction is required outside the system.

In this example, the number of transactions required to execute a portfolio build or adjustment is reduced from 9 to 2 when using the deduction calculation and from 9 to 6 when not using the deduction calculation. .. As another example, suppose the invention is used in a system used by 10,000 investors who build and maintain a portfolio from a list of 750 shares. Further assume that each investor engages in only 5 transactions in connection with his portfolio over a given period of time. The number of transactions to be sent to an exchange or a third party market maker, or the number of transactions to be executed by a broker as a dealer, is typically 50,000. Conversely, using this invention, the maximum number of transactions that the system must theoretically execute is 1500, assuming there are no sell deductions for buys (two for each stock). Transaction-Buy and Sell), depending on whether there is a sell deduction transaction for the buy, that is, whether the total number of shares bought exceeds the total number of shares sold, or vice versa. 750 if there is either a buy or a sell. In the first case, the computer-based system of the present invention saves costs associated with 48,500 transactions, and in the second case, the computer-based system of the present invention saves costs associated with 49,250 transactions. This is a 30: 1 savings.

The computer-based system of the present invention therefore has advantages with or without deduction transactions. As a further explanation, increasing the number of investors in the above example to 100,000 would increase the number of transactions to 500,000 in a normal brokerage business. Using the computer-based system of the present invention, the theoretical maximum number of transactions remains at 1500 (or 750 for deduction transactions). According to the computer-based system of the present invention, therefore, increasing the number of investors or the number of transactions they wish to engage in is simply applicable to the actual number of transactions that the system needs to execute. Increases the likelihood of most often approaching the theoretical maximum. Therefore, even assuming that all transactions are sent to a third party for execution, the cost can be partially maintained at a low level due to the very small number of actual transactions to be executed.

Graphical user interface during investor portfolio construction / modification FIG. 13 is a diagram showing screen examples that can be provided to investors during various steps in the process of building or modifying a portfolio.

Screen A shows one of the general representations of the expected correlation differential in the risk 55a and the return 56a of the portfolio 57a selected from the six equities. The profit of diversification can be obtained by using more than 20 securities in the portfolio. In actual operation, the number of securities in the portfolio is usually at least 20 or more. This is because, as mentioned above, an object of the present invention is to allow the benefits of diversification to be provided to investors. As a result, the number of securities in the portfolio will usually be at least 20, which will generally be substantially larger, unless the investor decides otherwise.

As the investor increases or decreases its ratio to the stocks in the portfolio (6 stocks in the example), the adjustments corresponding to the risk 55a and the return 56a to the portfolio move the pointers 51a, 52a up or down. In this example, the rectangles 53a, 54a to which the pointers 51a, 52a move along are color coded (like the litmus test strip). Color coding is used in connection with the representation of individual stocks in the portfolio as shown on screen B. The pointers 51a, 52a may be dials or other devices that show one value relative to others, and may be used color-coded or uncolor-coded.

Screen B shows the details of Screen A with each contribution of these stocks to the specified stock and portfolio, the risk 55b of each stock, and the correlation margin return 56b. Investors can instantly determine which stocks contribute to higher levels of risk and perhaps higher levels of return on the portfolio and adjust these as necessary to determine the level of risk and return in the portfolio. Adjust to fix (but see below). Obviously, the number of combinations is not as effective as limited by the designated shares selected. In that example, the system is unable to combine the required combination and can reduce the total risk and return or leverage that can be increased (shown as a bar that increases the risk of the portfolio) (eg other securities). , Money market funds, or preferred stocks or short-term bonds at AAA rates, which are mixed and added to screens A or B in the actual portfolio), or investors to this system Display the description that proposes various stocks with various characteristics depending on the selection entered earlier.

Instead, and importantly, the investor can adjust the pointers 51a, 52a (or the needle of the dial or the color code on the Lithomas strip, etc.) on screen A up and down, thus the system is desired for portfolio stocks. You will be able to recalculate the mix. The investor may be by the plan sponsor, employer, or by the investor himself, or by the investor for others for whom the investor is authorized (this is the actual transaction or execution with parameters set by one entity). (There may be joint or other accounts whose choices are made by others), you can request adjustments for a full mix of securities in your portfolio. This important dynamic interface is the main feature of the system in that it allows investors to adjust their portfolio to the desired risk / return characteristics by directly adjusting the risk and return pointer or dial or color. Having this system, which is an advantage and automatically determines what is the change in the importance of the securities with the portfolio, is necessary to adjust these desired properties. In this way, investors do not need to know the various interrelationships of securities with each other, or the portfolio effect on changing one or another security, or the exact type of portfolio characteristics desired without having to know other knowledge. The entire portfolio can be adjusted with a simple mouse click. And, as mentioned above, when an investor wants to build a portfolio that is larger or smaller than another portfolio at a similar or risk level, the investor enters the desired risk level in the system through any of these means. By doing so, the desired exact risk level can be specified.

Screen B also shows the calculation of risk (beta) 55b-55h, the expected correlation differential return level 56b-56h for the stocks used to calculate the portfolio risk level 53a and the expected correlated differential return 54a of the portfolio. The basic advantage of the computer-based system of the present invention and the concept of using a portfolio to invest in place of individual stocks is that the risk of any one of the stocks in the portfolio is different from the risk of the stock itself (thus. It is clear that the concept is to generate the benefits that arise from decentralization and the like. As a result, investors will be aware that they will focus on portfolio risk and return rather than individual risk and return. Next, in the prior art, it is necessary to consider and understand the effect on the portfolio because the individual stock positions are adjusted, whereas in the present invention, as described above, the pointer (51a on screen A, There is a great advantage for investors as the entire portfolio characteristics can be adjusted from the up and down movement of 52a (such as the needle on the dial or the color code on the Lithomas strip). Therefore, even if you are not a skilled investor, for example, when an investor adjusts a pointer, dial or color, the portfolio is automatically adjusted by having a system of speculation by reweighting, fund addition or margin trading. Can have.

Scale etc. can be adjusted to make different portfolios easier to see.

As shown on screen B, the common stock at Company A 57c has a risk of 0.9 (blue on the color-coded litmus test) 55c against the S &amp; P 500, which represents 5% of the total value of the portfolio. Its correlated differential return to the S &amp; P 500 is also shown in blue, showing -15%, 56c. Each remaining stock is shown in the same way. In this example, the stocks are listed in alphabetical order, but may be listed in any other order at the investor's preference. For example, an investor may adjust the order of presentation of stocks in the order of full value of the portfolio, from low risk to high risk, or vice versa.

In any of these examples, the security that the investor sees as a single integrated portfolio may be any security, including a fund or other investment that the investor enters into the system. As a result, when an investor has a variety of accounts that must legally be maintained as completely separate separate accounts, the investor puts each of these together into a single integrated account for analysis. Transaction execution by having the System also includes any account, securities or other investment contained therein as a single account desired by the investor (similarly, the investor analyzes Or any securities or other investment desired by the investor can be excluded from what is included in the account for transaction execution). In this way, investors are given the advantage of being able to easily consolidate all their holdings and can understand and manage all accounts, even those that must be maintained in legally separate accounts. Therefore, first, an investor who has a security in a 401 (k), an IRA, and an individual trading account and has a security for a child's account may see a single integrated overall holding. You can manage your total holdings to take advantage of the portfolio theory included to ensure appropriate levels of diversification, sector presentation, concentration level, total risk, etc. Investors will do this by simply noticing the account or securities or other investments within the account to be grouped together in order to do so as a single portfolio. As mentioned above, this embodiment of the invention can also be used in a similar analysis for other securities for which risk-return information is available, such as mutual funds in the first place.

With reference to FIG. 15, the interrelationship of natural language investors with the present invention is shown. The system includes a natural language interface 151, one of which is a software program on an investor's PC or a compatible product on a server related to the present invention. Another possible embodiment is a hardware-implemented module for interfacing an investor's PC. Investors can enter standards in natural language via the keyboard 152 or, if desired, through the voice processor 153 that recognizes spoken language and provides its translation to the natural language interface 151.

After interpreting the investor's input, the natural language interface 151 provides the portfolio and / or security characteristics 154 to the system. These portfolio and / or security properties are translations into more commonly used technical terms in the investor community to describe the investor's desired portfolio and / or security for the portfolio and / or security properties. ..

Other inputs are made to the system via a series of pre-prepared inquiries 155 displayed on the investor's screen. The pre-prepared inquiries would be "I want to invest in the stocks that give me a market-like portfolio" or "I want to invest in the stocks of a large company." When an investor clicks on this selection. A set of portfolio and / or securities characteristics 154 are automatically generated for subsequent users by the system of the invention.

When the investor specifies the portfolio characteristics, the flow proceeds to the stock selection mechanism 157 to access the information in the stock database 158, which contains all the methods of securities related to the portfolio characteristics. If the investor has the specified securities characteristics, these characteristics are entered in the characteristic file 156, which describes the various investment objects of the individual. For example, investors may want to invest in long-term, potentially productive stocks. Portfolio trait generator 156 can then generate a set of rules used to select stocks. This rule, based on stock selection 157, then accesses information in securities database 158. Once a stock is selected, the stock can be output in a variety of ways159. For example, this result can be displayed on the investor's screen and a hard copy output can be provided to the investor, or an electronic file can be sent to the investor for storage and accessed later.

In this way, relatively unsophisticated investors can request securities known in natural language terms and still use all of the sophistication features of the present invention.

Refer to Figure 16 to show the concept of Affinity Group investment. The present invention first collects investor demographic information from each of a plurality of investors 161. As mentioned at the beginning, all the information in this investor database is generalized to maintain the privacy of individual investors. The main purpose of this investor database 162 is to enable subsequent analysis of investor trends and trends.

In addition, securities investment and portfolio characteristics of individual investors are also collected in a similar manner to the collection of demographic information164. Then, in the portfolio characteristics of a particular investor, and / or securities invested and designated by the characteristics are sent to and collected by the generalized securities and portfolio database 165. This database is specifically associated with investments made by a group of investors.

When an investor joins an affinity group, or wants to see a screen based on the group or investor characteristics, or wants to make a coordinated investment, the investor has a set of affinity group selection criteria 166 via a PC or server. To access. Such criteria would be occupation, annual family income, education level, geographical area, and other demographic characteristics. The criteria selected to build a particular affinity group are then communicated to the investor database 163. Affinity group characteristics are retrieved from the general demographic database 162 and associated with a special portfolio or security selected from the general securities / portfolio database 165. This information is then used to build securities and / or portfolio profiles 167 for a particular affinity group. This securities / portfolio profile can then be output to investors168. Alternatively, a security profile 167 can be entered into the security and portfolio database 169 of the present invention, thus investing an execution output 170 showing how the security invested by a special affinity group actually executed. It is also provided for systems that are presented to the home and that implement or embrace the investor's portfolio 171. (In a similar manner, any other portfolio that an investor can build via any of the other means described herein is executed through the securities / portfolio database 169 and the portfolio so selected. Is presented to investors to show how they actually did 170.)

In this way, the investor can know about the affinity groups that the investor wants to build and identify the performance of securities and portfolios invested by a particular group.

In a similar manner, the present invention allows for similar investments in mutual funds, or similarly other securities, as opposed to similar investments in individual securities, either as part or in a separate security from the portfolio described above. In this example, the investor wants to know which mutual fund a particular group has invested in as a basis for making future investment decisions. In this case as well, not only the mutual fund invested by such an affinity group can be judged from the investor database, but also the investment performance of the affinity group can be judged.

In addition, if the Investor Group wishes, it may allow authorized or other investors in the same group to access the entire portfolio of the Group as a whole for monitoring or analytical purposes or transaction execution purposes. In addition, all investors can provide information to the system. In such an example, the system identifies the group as a separate group within the general demographic database 163 and grants members of that group access to the group or portfolio securities maintained by the leader of group (2). Will be done.

As described, there are also pre-packaged or proposed portfolios. The present invention continues to track those portfolios. For example, a Washington citizen's stock selection can be displayed to investors who have been given the option to purchase the same major securities as a public expert stock selection. The Dow 500 and Fortune 500 top stocks can also be tracked by the present invention given the opportunity to invest in the same top stocks listed in the index or magazine. In addition, performance data on stocks and portfolios that are potential investment candidates is generated to give investors more information.

While the potential of the invention for trading in equities and mutual funds has been discussed, it can be said that it is important that the systems and methods of the invention are equally compatible with tradable securities where economic scale is important. .. Therefore, futures, options, bonds and other distributable securities are equally subject to trading in the present invention.

Embodiments of the computer-based system of the present invention FIG. 14 shows an embodiment of the whole system by the computer-based system of the present invention. The computer-based system of the present invention includes a server 62 that executes a program B that controls the operation of the entire system. Other programs run program A on the investor's personal computer 63, but are fully run by the investor's program B. Note that these two programs A and B work together like a pointcast or other similar program, which downloads the data to the investor's terminal and is based on the "filter" selection made by the investor. View this data through a graphical investment interface. Therefore, one possibility of Program A is merely a communication program that allows the investor to establish a link to the server 62 and set a "filter" to determine what data to send to the investor. In this case, it is composed of a so-called filter, an investor's portfolio investment (stocks in), an investor's risk model, and the like. Once set by the investor, Program B performs all of the analysis and calculations necessary to advise the investor on the level of risk and correlated differential return inherent to that investor against known standards. This gives investors tighter control over their software configurations and facilitates upgrades and security protection.

By increasing the program functions of the investor in the program A, the number of times the investor accesses the server 62 is minimized, and thereby the communication connection fee to the server 62 can be reduced as a whole. In this embodiment, the investor can receive data about the investor's investment by simply accessing the server 62, and can set a new order when deciding a new order. The access time to the server 62 corresponds to the time to access the e-mail in this case. Therefore, there is more flexibility in the formation of functional levels in the two main programs A and B.

In addition, the investor can access the server 62 via some communication connection. First, the investor can access the server 62 over the Internet 64 using an Investor Internet Service Provider (ISP) that ultimately connects the investor's personal computer 63 to the server 62.

Second, investors can access server 62 directly via a dial-up modem connection. This is a security advantage in that many consider telephone connections to be more secure than open connections on the Internet.

Third, the investor can access the server 62 by using an intermediary that provides services to the investor, such as a bank or a broker. In this case, the investor can access the intermediary 65 using a dial-up modem or via the Internet 64. When the investor accesses the intermediary 65, the intermediary 65 accesses the server 62 using an internet connection or a dial-up connection.

The computer-based system of the present invention also has an electronic payment mechanism 66, which enables a transition to monthly, two-week periodic payments, fund investment, and the like. This allows investors to make investments suitable for regular salaries. Electronic payment mechanism 66 includes electronic withdrawals such as payroll deductions from investor checks or deposit accounts, credit card transactions, etc.

The electronic connection to the third party trading system 67 also has a program to digitize the transaction. Typically, these electronic trading systems 67 include a connection to a clearing house 68 for transaction settlement. Although not part of the invention, this is shown for completeness.

Since all the above-mentioned communication connections are standard and known communication connections, further description thereof will be omitted. Further, since the third party electronic payment payment system connection is composed of one of many known methods for electronically performing payment, further description thereof will be omitted. Finally, the third party trading system may consist of known trading, such as the Optimark trading system, or other systems that communicate using the Financial Information Exchange (FLX). The explanation of is omitted.

Operation of computer-based system of the present invention The computer-based system of the present invention is designed to provide a mechanism for an entirely new financial investment system that does not currently exist. With expert advice, investors can build, manage and modify complex portfolios that reflect their own preferences. Instead, investors can be confident that their portfolio is diversified and that it reflects the expected risk level. The computer-based system of the present invention also improves investor control over what shares are owned, how much tax is paid, how shares (investments) are voted, and so on. Further, the computer-based system according to the present invention is at a price comparable to or lower than the price at which a single security is traded through a discount broker for the entire portfolio and specified securities by the investor and the fractional equity interest of the security. Allows you to buy and sell, or to hold a stake in a mutual fund.

An investor (user in FIG. 6) accesses a server 62 that has the information necessary to build or modify a portfolio with the computer-based system of the present invention. This access is made via the Internet, dial-up modem connection, or an intermediary such as a bank or broker implementing the invention that makes it available to investors.

Investors who first access computer-based systems are provided with a range of security standards that adapt to their computer-based systems and their interests. For example, secure encrypted access will be favored by investors who have it as part of their Internet browsing capabilities. Dial-up modems are also available to investors who do not want to rely on the Internet, or investors have their own security controls and can securely connect to the processing sites of the invention, such as brokers or banks. It is also possible to access the system through an intermediary.

In addition, security can be achieved by dial-back or dial-up mechanisms. Investors who access the system on the Internet for the first time are given a password and logon ID without presenting credit information such as credit card information to the processing site. The processing site then calls the investor from the number presented by the investor, or the investor accesses the processing site from a direct call. Next, the investor presents the necessary information to the processing site by inputting the given password and the touch tone of the investor's confidential credit card information. Once the processing site obtains credit card information via direct call, it does not need to be presented the next time, allowing the investor to use the investor-site's specific password and logon ID for communication. Passwords and logon IDs cannot be used for any purpose other than communication with the site, and credit card information cannot be used on the Internet.

When an investor visits the site by any means, the initial screen asks for essential information about the investor, such as income range, other investments, age, financial capacity, and financial goals and debt.

Investors are then provided with information asking for preferences regarding "risk" and "diversification". The investor's answer provides the invention with the information needed to make the algorithm work correctly.

Based on this information, the present invention proposes an overall investment asset allocation that investors can change. Such an asset allocation model is relatively standard and is currently in use. However, the standard model may be adjusted by the investor when using the system and may carry additional risk in order to obtain high returns. The reason for enabling higher-risk returns than usual is the opportunity to fine-tune, monitor and maintain the risk level (based on the past volatility of the stock) selected by the investor for the investor's portfolio. This is because the invention provides to investors.

Portfolio risk fine-tuning is frequently used, for example, by investors seeking to choose a mutual fund, and investors using the present invention must ensure that the selected investment and risk profile are maintained under investor control. Because it can be done. In mutual funds (other than passive or unmanaged funds), investors are not guaranteed which shares will be included in the fund in the future and at what weight, and how much the fund will be cashed. Therefore, there is no guarantee that the fund's format and risk will not change without the investor knowing in advance about the change. Even in passive funds, it is uncertain how much of the fund will be held in cash at one time. As a result, mutual fund investors take additional risks with respect to the mutual fund's risk profile, which allows investors to raise their risk levels without gaining any benefit.

After deciding the overall asset allocation and preferring risk / return, investors can see various stock preferences, total capital, occupational fields, price-earnings ratio and growth trends through a simple screen listing securities etc. Financial factors and corporate organizational factors such as whether the company sells special products and have a good labor-management relationship (decisions on independent criteria such as whether the company has good or bad organizational factors are generally third parties. Based on the source.) Is asked.

Therefore, the investor identifies specific stocks to be included or not included in the portfolio. As a result, the present invention, like ordinary brokers, trades at a lower price, which is expected to be substantially lower than a bargain discount broker, if immediate trading is not required or if the system operator wants to close the trading to some extent. To do.

If the investor desires an immediate transaction for a transaction of choice, the invention, like any other discount broker, offers at a better or equivalent price than would be charged by a standard discount broker.

Once a preference is entered, the invention will, to the extent possible, automatically build all diversified portfolios professionally associated with that preference and asset allocation criteria.

If the portfolio is acceptable, the investor enters the investment amount and the security is purchased for the investor in the next "trading window" of the invention.

For the practice of the present invention, costs must be kept low so that investors can periodically purchase and modify the entire portfolio of securities. To achieve this, in one embodiment of the invention, orders entered by investors using the invention are aggregated. These orders are not to attach one investor's order to another, but to reduce the actual number of transactions required to be executed by the System. The number of sets depends on the number of investors, usage and other factors of the system. However, today, due to transactions that take place when the market is open, during the day, and when the market is closed, orders are aggregated when the market is closed, in the morning, and in the afternoon. If there is a market that can be priced by demand grounds or other factors, and there is a market maker who wants to open the market at that time, and the trading in that time is in line with the investor's interests. , Trading may take place at other times, such as in the evening or at any time during the day. Similarly, a system operator (eg, a bank or broker) will, in principle, pre-aggregate some orders by automatically executing, and then up to the trading window or to execute the pre-aggregated order. Hold orders until a certain amount is reached. For example, an operator takes 10 orders from 10 customers and automatically executes them when they are ordered to pre-aggregate all the orders and place the aggregate in the order position currently owned. And execute it as another order. This strategy has other drawbacks, including the fact that the operator must take market risk himself and potentially trade each order as a filing order for filing purposes and other requirements. However, it is feasible for certain small orders.

Shares can be purchased with very small odd-lot interests (1 or 2 shares), and even odd-lot interests that are usually not cost-effectively available to brokers.

The behavior of all investors can be automated, a specific amount is added directly from the deposit each week or month, and the selected stock is bought or sold depending on whether it meets certain criteria.

In subsequent witnesses, investors can modify their portfolio as desired, reflect new preferences, add investment prices, or sell some or all of the securities in the portfolio.

Investors can also analyze the portfolio in relation to other investments such as funds owned by the investor, or other investments in other accounts, and consider and modify the portfolio as a whole. can do.

The present invention tracks the tax base and acquisition data of stock purchases, profitable stocks and lost stocks, which allows investors to choose to sell stocks that generate capital gains or losses (long-term or short-term). , Thereby the tax effect can be managed.

In addition, because the investor actually owns the individual securities in the portfolio, not as an equity interest in the fund, the investor has the right to vote on the underlying stock (or appoints a vote by other direction). And have the right to sell individual shares when desired.

Therefore, the computer-based system of the present invention is a mutual fund based on their own simple, automatic and professional management for investors who want it, those who use discount brokers, and investors who want full care. Provides full "participatory" portfolio management for those who choose.

The strengths and advantages of the present invention with respect to mutual funds are as follows. Selection of individual securities included in the portfolio, Its management and apparently excellent taxation effect, Ability to make specific changes to the portfolio at least three times a day, as with mutual funds, the ability to buy and sell securities as blocks at the time of opening, daytime and closing, not at the next closing Including. Include global securities at a level not available to mutual funds, or choose to suit investor preferences by sector, price-earnings ratio, management method, format, and other factors; Ability to exercise the right to vote, other shareholder rights, control of the company, and the right to decide whether to deliver securities when acquiring the rights of corporate governance; Ability to selectively control dividend reinvestment; Be able to fine-tune risk and return preferences through full control over what is included in the portfolio and what investment strategies should be changed; Being able to modify risk levels and portfolios with lower potential costs or taxes; Being able to manage costs better.

These advantages and benefits of discount brokers include: · A cheap and cost-effective way to create a diverse portfolio; Being able to hold multiple small-scale sub-unit shares and odd-lot shares in multiple securities at a reasonable cost; · Being able to buy and sell individual securities at a very low cost compared to even the largest discount brokers (assuming you don't have to take immediate orders); Ability to build broad portfolio limits and parameters such as required portfolio diversification and maximum risk level; Monitor portfolio based on tax effect; To assist in diversification and selection decisions of strains that meet the purpose of diversification; Assist in clarifying other factors, investor preferences, and stock selections that satisfy these other preferences and objectives; It is expected that better execution will be obtained than trading through trading brokers and discount brokers.

An example embodiment of the invention is a self-managed 401 (k) account. By placing certain limits on the risk level and the maximum number of assets / liabilities, the system acts as a self-managed 401 (k). For example, employers may want their employees to manage their own accounts without increasing costs to employers. Therefore, once a plan is created, individual accounts are billed at a relatively low monthly fee (or a small fee based on assets) to allow users to self-managed accounts. To protect employers, there are certain restrictions on accounts, for example, employees investing all accounts in a single stock or building a portfolio at significantly higher risk. I can't. The program can be configured to prevent the execution of transactions that violate these basic parameters and inform the user why they cannot execute.

Another embodiment of the invention, shown as an example, is used by an existing brokerage company that allows an investor or customer to create a portfolio and trade this portfolio through the brokerage company, as described above. is there. Once the portfolio arrives at the central computer, they are broken down into its constituent transactions. There are several possibilities in this regard. First, multiple transactions are brought together to offset each other, leaving a small number of stocks to buy or sell for each asset / liability. In this case, the intermediary company can take on the risk of changes in the price of the stock, simply change the owner of the stock within the company, and execute the transaction at the end of the day to eliminate the risk. be able to. Second, it can be executed continuously when the transaction arrives, which reduces the risk. In this case, the investor continues to devote time and effort to the portfolio, but the company is trading in preference to others in order to achieve the desired portfolio. Third, transactions are simply lumped together until they reach a certain size (amount or number of shares) to execute.

Other applications The computer-based system of the present invention may be used by general investors to manage other "things" such as options, commodities, bonds, foreign stocks, or of investment banks for transactions such as derivatives. Can be used for. The computer-based system of the present invention can be used to build and manage a portfolio of tradable assets or liabilities or a combination thereof, and a portfolio concept (like many financial assets). If the decentralization or integration of is advantageous, it will bring benefits. For example, as mentioned above, the invention can be used for foreign or domestic stocks, options, warrants, long-term bonds, medium-term bonds, limited partnership interests, private placement securities and any other security. In addition, the present invention relates to commodities, futures, bank loan syndication interests, and new assets to be traded, such as pollution rights (including global warming and air / water pollution rights) or insurance claim interests. Will be available for debt. 1) Get the investor's portfolio characteristics preferences, 2) list and select the items to trade with these preferences, 3) analyze and trade these assets as a portfolio rather than as a separate asset, 4) These transactions are related to applicable indexes such as time (eg every 3 hours), time (eg 9:30 am, 12:30 pm, 4:30 pm), volume (eg 1000 trades, or aggregated $ 5000 trade). Aggregate and 5) execute transactions as aggregated, and if possible, these items may be subject to offsetting transactions.

In addition, investor risk appetite and other information can provide investors with appropriate and focused private placements and other opportunities.

Furthermore, the present invention allows smaller investors to invest in more private placements to diversify the venture capitalists' gains from private placements. For example, many venture capitalists invest in multiple private placements, which are usually high-risk-return investments. By investing in some, venture capitalists can reduce their risk. This is because one of the private placements is more likely to succeed, offsetting losses on other investments.

The present invention enables this same opportunity for smaller investors on a smaller scale. For example, by allowing a private placement to be on the same list as other stocks, the system allows investors to choose a private placement for investment. By choosing some of them, investors can extend the risk to all of these many investments and reduce the overall risk.

1 Asset allocation model 2 Portfolio selection editor 3 web server 4 storage device 5 Third party trading system 6 Database of tradable assets or liabilities 7 Third party payment settlement system 8 Settlement institution