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The Wall Street Journal Online's Guide to Online Investing: How to Make the Most of the Internet in the Bull or Bear Market - Softcover

Pettit, Dave; Jaroslovsky, Rich

 
9780609807385: The Wall Street Journal Online's Guide to Online Investing: How to Make the Most of the Internet in the Bull or Bear Market
Softcover
ISBN 10: 0609807382 ISBN 13: 9780609807385
Verlag: Three Rivers Pr, 2002

Inhaltsangabe

An authoritative and practical handbook for investing online provides a user friendly guidebook for making wise investment decisions, offering valuable information on the stock market, bonds, and mutual funds, as well as helpful advice on negotiating the online financial world. Reprint. 25,000 first printing.

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Über die Autorin bzw. den Autor

Dave Pettit is deputy managing editor of The Wall Street Journal Online.
Rich Jaroslovsky is senior editor of The Wall Street Journal, helped create The Wall Street Journal Online, and was its first managing editor.

Aus dem Klappentext

, most practical guide for steering investors through the Internet s vast array of financial information, tools, resources, and opportunities . . . from the Internet s most authoritative and successful source of financial and business information.

The only book investors need to reap the rewards and avoid the treacheries of the investing cyber-jungle.

The Internet world has changed drastically in recent years, but that doesn t mean you should shy away from online personal investing. It simply means that Internet investors need to be more careful in navigating through a confusing, possibly treacherous cyber-jungle. Who better to guide you than the reporters and editors of The Wall Street Journal Online, the Internet version of The Wall Street Journal, the world s most authoritative source of business and financial information? In this updated paperback edition, Dave Pettit, Rich Jaroslovsky, and the reporters and editors of The Wall Street

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Trading Stocks Online

It started out as a curiosity, quickly became a fad-and now it's a revolution. The simple act of tapping a stock trade into a personal computer has transformed a multi-billion-dollar industry. The biggest names on Wall Street have had to tear up their business plans. "My broker says" has been replaced by "I read on the Net." Some of this interest will be fleeting. The public's fixation with stocks and trading clearly was stoked by the historic bull market that swept stocks higher through much of the 1990s. As investors have seen since then, it is a lot more fun to talk about stocks-and easier to make money trading them-when prices seem to do nothing but rise. A long bear market for stocks (or even a period of stagnation where prices barely move) takes the glamour out of trading.

For some time, many on Wall Street bet that a bear market would quickly snuff out online investing. (In fact, the Internet itself was considered a fad at first. Many predicted that interest in the Net would quickly fade out-a 1990s version of America's brief 1970s infatuation with citizens band radios.) But that talk petered out as Internet-accessible brokerage firms posted year after year of growth in customer accounts, even when the market struggled.

Charles Schwab & Co. (www.schwab.com) was the first established brokerage firm to embrace the Net, and it quickly saw thousands of its clients give up its toll-free phone lines and place their orders online. By the end of 2000, more than 80% of its stock trades came in over the Net, and across the industry, roughly one in five stock trades originated from orders that were placed online. In 2001, there were more than 20 million online brokerage accounts, up from just 1.5 million in 1996, according to Gomez Advisors, an Internet consulting firm in Lincoln, Massachusetts. The number of accounts is expected to top 50 million in 2004, estimates Forrester Research in Cambridge, Massachusetts.

As if any more evidence were needed that Wall Street couldn't

afford to remain aloof from online investing, Schwab's total stock market value edged above that of Merrill Lynch & Co. (www.ml.com) in late 1998. If there is one measuring stick that always has Wall Street's attention without fail, it is the stock market. Schwab, a discount-brokerage firm barely 25 years old, was king of the hill. The fun didn't last for Schwab, though. Its value plunged when the stock market soured, falling back to half of Merrill's level.

Trading volume shriveled on Wall Street-online and off-line-when the late 1990s tech-stock bubble burst. And online firms, whose earnings depend more on commission income than big investment banks like Merrill, saw their share prices plunge. But even as investors traded less frequently, they still were opening new online accounts. Schwab alone, amid the slump, added 600,000 active customers in one twelve-month stretch. Investors sought more advice from the brokers and account growth leveled, but there weren't any signs that large numbers were fleeing back to traditional, old-line brokers.

Few people expect online stock trading to go away. Even Merrill is deeply committed to online trading. The phenomenon has clearly touched a nerve with the investing public and tapped into investors' desires to use technology as a means to accomplish things cheaper and faster. "Take my word, it's really easy," said Charles Schwab, founder of the company that bears his name. "Even I can do it, and I'm all thumbs." Mr. Schwab called online trading "the ultimate empowerment of the individual." As Home Depot discovered, we really are a nation of do-it-yourselfers-whether it's hanging wallpaper or buying a stock.

FIRST AND FOREMOST: IT'S CHEAP

There are many reasons to trade online, but the most obvious one-and the one that first caught the attention of investors-remains its biggest selling point: Online brokers are just so dirt cheap.

E*Trade, one of the first cyberbrokers and the one that first really captured Wall Street's attention, stunned the industry in 1996 when it went on the Internet with a $14.95 stock commission-and launched its in-your-face "Boot Your Broker" advertising campaign. Like the discount brokerage firms (which offer trading but little or no advice) that sprang up in the mid-1970s after the Securities and Exchange Commission put an end to fixed stock commissions, online brokers had found a cheaper way, through new technological efficiencies, to offer an old service.

Because of the way brokerage firms charge for stock trades, it's difficult to compare prices precisely. Internet brokers usually charge flat rates, often for transactions up to 1,000 shares, with additional fees for larger or more complicated orders. Traditional brokers, by contrast, levy fees based on how much stock an investor wants to buy or sell, and how much the stock is trading for at the time. But, even factoring in the discounts many big brokerage firms reserve for their best customers, online brokers charge commissions anywhere from half to one tenth, or even one twentieth, the cost of an old-style full-service trade.

That's changing-but not because online brokers are becoming more expensive. Instead, traditional firms have reworked their pricing structures to become more competitive. Even mighty Merrill Lynch, long the most popular brokerage firm for individual investors, and one that for years dismissed the online trading phenomenon, now offers online trading accounts designed to stem the flow of business out of the firm. One type of account offers trades for $29.95, but no advice from a broker. Another promises unlimited trades, either over the Internet, by phone, or with a broker, for an annual fee based on a customer's assets. Right now, Schwab is charging many of its customers a relatively steep $29.95, but that's still far less than the $300 a customer in a traditional Merrill account (it's still offered) would pay to buy, say, 300 shares of a stock traded on the Nasdaq Stock Market. The same trade would have cost $19.95 at E*Trade (because trades for Nasdaq stocks cost more than those for issues listed on the New York Stock Exchange), and $9.99 at high-tech Datek Online. The fee at George Brown & Company, a niche firm based in Boston and now owned by J. P. Morgan Chase? A mere $5.

Traditional brokers, of course, also offer sophisticated advice and financial planning along with their stock trades. That's the card full-service firms, such as Merrill and Salomon Smith Barney, hope to play as they try to woo cyber-savvy customers with their new Internet-based accounts. These firms are betting that investors still want-and need-the help of a broker. Schwab, which controls the biggest share of the online stock-trading business, seems to agree, at least up to a point. In another example of how the Net has turned things upside down, Schwab-which made its name offering stripped-down service and low prices-now markets itself, in part, by calling attention to the service and advice it offers customers, contrasting them with the bare-bones firms that offer still cheaper trades. Those even less expensive firms offer no apologies for their lack of bells and whistles. That, they say, is what their customers want. "Our customers are financially literate," explained Jeffrey Citron, the former chief executive of Iselin, New Jersey-based Datek. "They know exactly what they want to buy."

Not everyone is that sophisticated. But even less savvy investors probably realize that most professionals, with all their stock-picking prowess, usually can't beat the returns of major stock market indexes. So why pay more for their services?

"If you're paying 1.5% each way on a trade, or if you're paying 1.5% or 2% a year (to have your money managed) and...

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Verlag
Three Rivers Pr
Erscheinungsdatum
2002
Sprache
Englisch
ISBN 10 
0609807382
ISBN 13 
9780609807385
Einband
Taschenbuch
Anzahl der Seiten
352
Kontakt zum Hersteller
Nicht verfügbar
Verantwortliche Person
Nicht verfügbar