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The CSI Team - At your service:
Andy, Betty, Bob, Debbie, Denise, Fran, Heather, Jason, Jeanean, Jose, Josh, Kathy, Ken, Kurt, Linda, Mike, Nassrin, Patti, Ron, Rosie, Rudi, Sabrina, Sean, Steven and Terry.
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April 2004
CSI Technical Journal Volume XXII, Number 4 |
Page 1 |
Topics discussed in this month's journal:
A Historical Account of the World’s Premier Data Repository Notice of Price Increase For Stock, Mutual Fund And LME Data Tech TalkHoliday Schedule
CSI will be closed for voice communication on Friday, April 9th for the Good Friday holiday. Although U.S. exchanges will be closed, the CSI host computer will be accessible as usual. Those markets that remain open will be available for updates at their normal posting times.
A Historical Account of the World’s Premier Data Repository and a Mini-Biography of CSI Founder Bob Pelletier
CSI customers are a remarkable group. Although each has an individual personality and style and each has his or her own aspirations, many of you share common characteristics that make you collectively unique. CSI customers are, without exception, progressive. Each of you is forward looking and forward thinking. Goals are not vague concepts. They are very nearly tangible commodities. Another common characteristic of many CSI customers is the entrepreneurial spirit. A notable number of CSI subscribers are self-employed and many more would like to be. It is for those of you who have made that leap, or who are considering it, that this Journal is dedicated. It is the story of how Bob Pelletier went from employee to employer, and from programmer to pioneer in the database industry.
Like you, Bob Pelletier is a progressive thinker, and his pioneering spirit has long been a guiding force at CSI. In fact, the humble beginnings of the renowned CSI database can be traced to Bob’s simple quest to meet his own needs for data on the futures markets. It all began more than 40 years ago, at a time when only a handful of commodity exchanges and commodity products were traded, all in the U.S., Canada and the UK. The scarcity of markets is likely the reason that few, if any, firms provided commodity data to the general public. Bob began collecting and compiling market statistics because he could find nowhere to buy them. In truth, CSI’s inception was influenced by several events, ranging from a personal introduction to the markets to technological advancements that happened to unfold over recent decades.
Bob was a Systems Analyst at the General Electric Company (GE) when his need to build a comprehensive futures database arose. He was working in product reliability analysis and assessment for the Heavy Military Electronics Department, which specialized in radar and sonar manufacturing and signal processing, when one of his co-workers introduced him to the commodity markets. In an incident you may have read about in earlier editions of this Journal, Bob’s co-worker had impressively pyramided a couple of world sugar contracts into an entire trainload before and during the Bay of Pigs invasion of Cuba. The event, which ended in failure for American and expatriate Cuban forces, became an international embarrassment. Although politically unnerving, it was financially spectacular for holders of long sugar contracts such as Bob’s friend. Bob was intrigued by the possibilities.
Bob and his commodity-trading friend worked closely on an assignment at a mountain site in Pennsylvania where they developed software for determining the coordinates of a possible nuclear burst in the Washington, D.C. area. On a personal level, Bob was sufficiently impressed by his friend’s know-how in the futures area that he allowed himself to be persuaded to begin gathering data and studying technical analysis. In the early 1960s, Bob began saving daily copies of various New York, Chicago and London newspapers. His plan was to extract data from those sources, which he religiously saved over the ensuing years. Unbeknownst to Bob, the CSI database was born.
Bob’s work at GE involved programming assignments that had him communicating with GE’s huge mainframe computers through an acoustic-coupler equipped terminal. Through that terminal, he could program his work assignments and send the resulting software and computational requests across the phone lines to the company’s main computer facility. These were exciting times because those crude terminals made it possible for computer analysts to remotely operate GE’s large IBM mainframe, a monstrosity held in a 3,000-square-foot room, located more than a mile from the actual work site. Today one single PC is probably a thousand times faster and more capable than that massive machine that was housed in a huge facility in upstate New York, but at the time, it was truly remarkable.
You might say that the teletype terminal with an acoustically coupled device was a precursor to the Internet. Data and programs could be typed offline on paper tape, and the entire file could be transmitted live to the host computer. Naturally, Bob didn’t really appreciate the full potential at the time, but he did recognize an opportunity to enhance his market analysis. Bob purchased one of those remote terminals from GE for over $1,000 and used it with the acoustical coupler in his home to engage the powerful GE mainframe computer. He became a paying customer of GE while still remaining an employee.
By day at the office, Bob’s work assignments allowed him to learn useful analysis tools based upon interesting techniques in radar signal processing. In the evenings at home, he wrote simple systems to trade and follow the commodity markets. To his own surprise, he turned out to be very successful at it. Little did he know that the radar signal processing technology would become the basis for analysis software he would later write dealing with future market direction.
Bob had learned that technical analysis could work, but found no place to buy analysis programs. Out of necessity, he wrote more of his own. As a leader in this new field, Bob wrote a few papers on the subject and submitted them to “The Commodity Trader’s Journal,” a small, relatively obscure publication. The published articles led to an opportunity to trade an investor’s account. Although he sometimes wonders if he should credit skill or luck, Bob logged some very substantial profits for his client. In 1974, this very satisfied customer invited Bob to move to Florida and work full time trading his personal account. This represented quite a large risk - leaving his secure job at GE in Syracuse, N.Y., but Bob took the leap and moved to Florida.
Bob had already incorporated Commodity Systems Inc (CSI) in New York State in 1970 while still working for GE, so the company simply relocated to Florida. The client purchased Texas Instruments minicomputers were purchased by his client to expand computer capacity and assist in the development of programs and the building of the all-important database of historical futures data. The trading success continued, and a related recommendation to purchase a seat on the Comex exchange for just $13,000 capped off their successful collaboration. A couple of years after the move to Florida, Bob’s client became ill and dropped out of the markets.
Bob was at a crossroad. He had the outstanding opportunity to purchase his client’s substantial computer assets at a deep discount of about 25 cents on the dollar. Again, Bob took the chance. He found an investor who helped pay some of the start-up costs in building CSI into a data processing firm - most notably the cost of those TI computers. That investor is still involved in the company and happy that CSI has been amicably moving forward for 30 years. Once he became associated with his new investor, Bob hired a staff to work on compiling what has turned into the most extensive database of world futures, options, funds and world stocks in existence.
The original data entry staff included four or five high school valedictorians. The work that they did, compiling historical data, was a fairly menial task, but because these bright people were devoted to doing a good job, they kept the data in impeccable condition. Why so many valedictorians? Bob called the local high schools and asked that they send over their best students. He remains convinced that the business school norm of hiring people who precisely match the skill level of their assigned task is terribly flawed. His employees were not bored with their assignments, and they did a remarkable job getting everything right. The 20-hour work days took a toll on Bob, however, who worked nearly three successive years with insufficient sleep.
At CSI’s employment peak, well over 50 people, sitting basically shoulder-to-shoulder at dozens of terminals, spent their days typing historical data into the database. Their data sources were the thousands of daily newspapers that had been collected over the years, plus a very expensive electronic quotation service called Bunker Ramo that helped to capture daily updates on all types of data series. The database was expanded because it was needed for analysis and because there was now a growing market for financial data.
Long before the Apple computer revolution of the late 1970s and very early 1980s, CSI (Bob) earned supplemental income as a job-shop programmer for several analytical software developers, providing them with both programs and data. Although CSI was originally a trading advisory service that shared in the profits of investors, providing data clearly held less risk and liability. Bob eventually switched CSI’s focus to becoming a worldwide data supplier. This was hastened by Tim Slater of CompuTrac, who encouraged CSI to offer data to their substantial customer base. Tim’s offer to make CSI their sole source data vendor was a welcome alternative that kept CSI profitable during the early years.
Bob led the charge in innovative data warehousing with the Unfair Advantage® (UA) system. This is an amazing data repository that was founded on principles that many believed would never work. CSI’s algorithms achieve compression ratios that approach 10:1. Data compression is important because the volume of data to be held on every customer’s personal computer has to accommodate many, many decades of information far into the past. Without some serious compression, all of that data could not fit on the data storage device of a typical microcomputer.
Bob Pelletier’s inquisitive nature and outside-the-box thinking led him to develop a company that first existed to meet his own needs. It evolved to exploit his talents and now has grown to include a rather large team of talented computer scientists, data specialists and marketing and service representatives. A few of Bob’s original employees are still with CSI. Vice President Mike Feran joined the company in 1978 and has been an irreplaceable asset since that time. Amazingly, about 50% of all current CSI employees have been with the company for more than 20 years. This experienced staff brings to CSI an unparalleled understanding and competence in dealing with market data and analytical software. The result of all their work is the world’s most complete and comprehensive financial database.
The sheer size and scope of CSI’s database, beginning with the very first day of trading for over 99% of all such entries, is unprecedented in the industry. It includes over 900 commodity markets from all over the world, reported upon in a daily frequency, 17,000 world stocks, 15,000 mutual funds, every futures option ever traded, a comprehensive database of timely U.S. government and U.S. commerce data on bonds, employment, productivity, federal fund rates, etc. You get the idea. CSI is also a prominent data source of Yahoo!, Microsoft Network and dozens of other Internet firms.
Your continued patronage tells us that CSI’s offerings meet your needs in one way or another. Bob and everyone at CSI appreciate your patronage. We continually strive for new ways to fulfill your very unique and specific needs. We hope this article may have been inspiring to current and future entrepreneurs, but please don’t take it as a recommendation to enter the data industry! With the Internet providing unlimited competition for on-the-fly data the depth, scope and accuracy of CSI’s database are the things that set CSI apart and keep it a viable, even thriving business. Bob’s experience would be impossible to replicate in the current environment, but there are many new, exciting avenues for those who are willing to take the leap.
Happy trading,
Sabrina Carle
Editor, CSI Technical Journal
Compiled with information provided by Bob Pelletier
Notice of Price Increase for Stock, Mutual Fund and LME Data
We regret to inform you that the London Metal Exchange (LME) and NASDAQ, two exchanges we have dealt with for many years, are significantly increasing the cost of redistributing their market data. Because of our low profit margins, we are forced to pass these higher costs to our customers. These new fees apply to all data vendors, so they will undoubtedly be reflected in the prices of competitive data firms in the near future.
The LME has again their royalty fees for redistribution of market data. These fees are now so excessive that they could double a customer’s expense for receiving the information. We have appealed to the LME to repeal this decision, but in absence of a reprieve, we have no choice but to pay the higher fees. Beginning with the May 2004 billing cycle, all users of LME data will be charged an extra $3.00 per month to help cover these fees. Prepaid subscribers will see the increase upon annual renewal after April 30th. All World Market subscribers who would like to continue accessing LME data should notify CSI immediately to avoid service interruption. If you do not opt to receive LME data, no surcharge will apply.
NASDAQ recently imposed a fee for dividend and split information on their stocks and mutual funds. Their justification for these charges involves their expenses in processing 1) voluminous reports on the mix of shares and markets for the 15,000 mutual funds they quote, and 2) dividends and split adjustments for thousands of NASDAQ stocks. We acknowledge their costs in data compilation, but must recoup the expense by raising our prices slightly. We are, therefore, raising our rates for stock and mutual fund subscription categories by $1 per month. The new rates will take effect in the May billing cycle and will apply to new and renewing annual subscriptions beginning in May.
The LME and NASDAQ exchanges stand alone in the world in demanding extra fees for something the other 80-plus exchanges offer freely to promote interest and trading. Exchanges earn substantial revenue from commissions, but these exchanges seem to believe they can pass off some of their expenses in an inconspicuous manner by taxing the data vendors who have loyally supported them. We believe that the act of providing information flow concerning price and volume reports fosters exchange success and view this as free advertising for the exchange.
If you would like to contact the LME to urge them to discontinue their redistribution fees, please contact: John Vincent via e-mail at: John.Vincent@lme.com.
Bob Pelletier
Tech Talk
We ran out of room in printed version of this month's Journal, so the following Tech Talk column is available only through our website. This month the CSI Technical Support Staff discusses Unfair Advantage acceleration techniques that speed the downloading process, rebooting your computer to achieve optimal performance, and accessing correlation tables on the CSI website.
Q. Wow! I tried the Unfair Advantage acceleration tips listed in the March issue of the CSI Technical Journal, and what a difference they made. My daily updates seem to fly. The article said there were other accelerators to try. Will you list some in Tech Talk?
A. The Advanced 1 screen under General Program Settings of UA Preferences allows for customizing data distribution in a few ways that enhance performance. Use “Perform distribution in a background thread” to allow UA and other programs to operate more smoothly and experience a slight performance gain. (This is recommended for everyone except users of some notebook computers which tend to freeze during distribution with this feature.) The “Raise distribution thread priority over foreground tasks” is related. It will make your computer more responsive to UA, but less responsive to everything else, unless you have more than one processor.
Use the “Memory Map DB Files when retrieving data” feature to improve performance while rewriting files in your portfolio. This should be used if you have at least 15 MB of memory free when UA distributes. Windows NT systems seem to show the most benefit from this feature.
Q. I find that the longer I leave my computer running, the more likely Unfair Advantage is to fail. Is this just a coincidence?
A. Not at all. The act of rebooting your computer clears out the memory cache, which clears out a host of potential problems. Not only is UA more likely to fail if your computer runs continuously, your other program are too. You should power down and restart your computer at an absolute minimum of once per day, and preferably more frequently for optimal performance.
Q. When I went to view the correlation tables on the CSI website (www.csidata.com), it said, “Unfair Advantage Subscriber login required.” How can I get into this section of the CSI website?
A. If you are a CSI customer who regularly accesses the database with Unfair Advantage, then you can access the correlation tables by simply entering your CSI User ID (first) and Customer number (second) when prompted. You can find this information under Preferences in your UA software. See “Account” under “General Program Settings.” Otherwise please call our Marketing Department to arrange a Correlation-Table-Only subscription.
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