I just stumbled on Marketcetera, our industry’s first open source STP trading platform. This isn’t really for investment advisors, it’s for hedge funds and large trading desks that use FIX to do straight through processing. I would assume it competes with Advent Moxy and FlexTrade. Or *will* compete, since it’s still under development.

From their web site:

A true alternative to expensive, monolithic proprietary trading systems or brittle software mashups, the Marketcetera Platform is a comprehensive open-source software infrastructure of ready-to-use components that gives users maximum flexibility and technology choice.

This is really exciting. I hadn’t realized anybody outside of our own FinFolio effort was working on an open source project for wealth management. They’re using traditional open source Java-based tools, but also released a .Net API as a concession (one would assume) to the large numbers of Microsoft silo programmers in our industry.

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According to the New York Times, this thing may not be over yet. Joe Lewis, Bear Sterns second-largest shareholder, has teamed up with their chairman to fight back against the JP Morgan acquisition. They’re trying to put together a coalition of former bidders for Bear to give JP Morgan some competition.

As I mentioned in my last post, JP has the rights to buy 20% of Bear Sterns at $2/share which is supposed to prevent other bidders from stepping in during the due diligence period. For that reason, I don’t see Mr. Lewis being successful, but it could force the acquisition price up to a more reasonable amount.

The Wall Street Journal has the inside scoop on how the Bear Sterns deal went down. They make a case for the Fed’s 28-day liquidity lifeline actually being the straw that broke Bear’s back, causing such a wave of doubt about their ability to continue, that it started a run on the bank. What was supposed to create a window for Bear to find a buyer (still planned to be JP Morgan), actually made it necessary to slam through a 24-hour emergency deal to prevent the US economy from collapsing on Monday.

[The illusion of stability] was shattered Saturday morning, when [Treasury Secretary] Paulson was deluged by calls to his home from bank chief executives. They told him they worried the run on Bear would spread to other financial institutions. After several such calls, Mr. Paulson realized the Fed and Treasury had to get the J.P. Morgan deal done before the markets in Asia opened on late Sunday, New York time. “It was just clear that this franchise was going to unravel if the deal wasn’t done by the end of the weekend,” Mr. Paulson said in an interview yesterday.

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Ever had aspirations to be a technical trader? Do you have clients who day trade on the side? Check out Inspectd.com, which is a little investor quiz that shows you a historical stock chart, and lets you guess whether the stock rose or fell. You start with $100,000 and it tracks your gains and proceeds as you time different stocks, without letting you know what the stocks are.

Granted, this is just a toy and it is missing many pieces of information that a trader would have access to, like technical indicators, knowledge of how the stock has historically correlated to indexes, etc. But it’s really fun. After about 25 trades, I managed to turn my $100,000 into $155,016:

Ok. Back to work.

Over the weekend, JP Morgan announced an agreement to acquire Bear Stearns in a $2/share fire sale.  The deal has been approved by both companies’ boards and it values Bear at just $236 million, compared to the $3.5 billion valuation Bear had at the close of market on Friday and $20 billion valuation they had in January.

From the Wall Street Journal:

Effective immediately, J.P. Morgan Chase is guaranteeing the trading obligations of Bear Stearns and its subsidiaries and is providing management oversight for its operations. The deal isn’t subject to any conditions, except shareholder approval. It is expected to close before the end of the second quarter.

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Davis Janowski jumps on the all-in-one-software-is-dead bandwagon with a recent article in Investment News. The article largely documents the conversation flow of a vendor roundtable at the Chicago FPA conference. It’s peppered with depressing quotes from both advisors and vendors talking about how hard it is to make their software applications talk to each other.

Janowski says:

Problems come and problems go, but linking adviser tools so that data entered once can populate several software programs — that’s a problem that seems eternal.

I think that all the industry pundits have now thrown in the towel on integrated software except, possibly, for Joel Bruckenstein, who said nice things recently about both the Your Silver Bullet initiative and Interactive Advisory Software’s integrated solution.

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Investment News has a great article on Morningstar’s performance since their IPO in 2005. Amazing is the only word for it. Check out their performance against the Nasdaq and S&P over the last few years. Keep in mind that’s a logarithmic scale.

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This is a bit off-topic for a wealth management blog, except in the sense that it’s Part 2 of my also off-topic “Ron Paul for President” post. After endorsing him here, and paying some $$$ to attend a campaign luncheon, I ended up in a prominent position on the endorsements page of Dr. Paul’s web site. This was due to (1) my last name starting with “A”, and (2) being listed in the “authors & media” category which also starts with “A”.

The Nevada caucus seemed like a pretty big deal. Nevada is now an early primary state so, like New Hampshire and Iowa, we help to “set the political tone of the nation”. It was also one of the few states where Congressman Paul had a shot at winning (he placed second after Mitt Romney). A first place in Nevada could have catapulted him into national prominence and given him a real shot at winning the GOP nomination.

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Microsoft just released the first beta of Internet Explorer 8. Improvements include noticeable speed increases, full standards compliance, and integration with several web apps, including Facebook and eBay. Technically, this is a developer preview, but I’ve been using it all day and it seems to work just fine. If you don’t mind using beta products, you can download it here.

Throughout most of my career, I’ve been an admirer and would-be emulator of Bill Gates. I always thought Microsoft’s theory of software design was the best in the business and the true foundation of their success. I admired Gates’ ability to address the big picture, while remaining competent at the micro-level, reviewing and commenting on the source code of individual Microsoft products right up to his retirement. All throughout my Techfi years, I had grandiose visions of us being the Microsoft of finance, and building a platform that would somehow become the integral “operating system” of our industry.

But over the last few years, I’ve become more and more drawn to the story of Steve Jobs. He was just as driven as Gates, with more style and better design skills, coming up short only in the most fine-grained technical details–the same type of low-level technical skills I’ve been neglecting myself recently. With Gates fully retired from the industry, and Microsoft becoming more IBM-like by the day, I find myself looking to Jobs’ Apple more and more for inspiration.

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