| BUSINESSWEEK ONLINE : DECEMBER 27, 1999 ISSUE | ||||||||
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| WHERE TO INVEST -- THE INVESTMENT SPECTRUM
Investing Online? Don't Just Wander the Web How to find the investment services that fit your style David Guarnera, a day trader in San Francisco, logs on to Webstreet Securities (www.webstreet.com) because it processes his orders in two to six seconds and charges no commissions on purchases or sales of at least 1,000 shares of a Nasdaq stock worth $2 or more. David's brother Gregg, a software consultant in Reston, Va., is a more long-term investor who makes only a handful of trades a year. He does them through Charles Schwab (SCH) (www.schwab.com). Despite Schwab's higher commissions, Gregg likes the huge brokerage house because it also executes trades quickly and its brokers and local offices are readily accessible. As online investing mushrooms, people are faced with a daunting set of choices, whether they're setting out to pick a broker, researching stocks and funds, or merely surfing the Web for the latest gossip on a hot company. When it comes to choosing a broker, however, the hunt doesn't have to be so hard--even though more than 160 sites now clamor for your orders. Several sites, from the iconoclastic to the strictly quantitative, have sprung up to help screen for the best brokers for day traders, buy-and-holders, and those in-between (table, page 158). Be aware, though, that many accept advertising from the e-brokers that they rate. Some, such as the site run by Gomez Advisors in Lincoln, Mass., also sell consulting services to e-brokers who want to improve their ratings. One Web site that doesn't take ads is www.forrester.com, which names the top five online brokers based on surveys of consumers who use them. Ranking criteria include the quality of educational content; customer service, such as response to phone inquiries; and ease of such transactions, such as opening an account. Its most recent rating put Schwab on top, followed by Merrill Lynch (MER) (www.merrilllynch.com), Donaldson, Lufkin & Jenrette Securities (DLJ) (www.dljdirect.com), Fidelity Investments (www.fidelity.com), and T.D. Waterhouse (TWE) (www.waterhouse.com). Schwab, the site says, ''has easy navigation, competent consumer service, and a vast array of product offerings. Investors dinged Schwab for high commissions, but customers felt extremely confident about transacting on the site.'' At Gomez' streamlined site, a typical screen would rank brokers with an overall score, based on ease of use, cost, customer confidence, on-site resources, and such services as real-time updating of accounts, seamless but strong security, and sophisticated alerts. Gomez' current overall scorecard ranks E*Trade Securities (EGRP) (www.etrade.com) first, followed by Schwab, Fidelity Investments, National Discount Brokers (NDB) (www.ndb.com), and DLJdirect. E*Trade ''simply offers more features, tools, and services than its peers and...at a competitive price,'' the site says. Another Gomez scorecard ranks companies by individual criteria; if ''on-site resources'' is what's most important to you, it'll show that E*Trade again would best fit that need. You can also pick a broker based on the type of investor you are. If, for example, you're a hyperactive trader, E*Trade again would top the list. Actually, this approach of assessing a site based on the kind of investor you are is a good one. Based on that method, here's what we came up with in a recent tour of the Web: ''Nervous newcomers to the online experience should get comfortable with onscreen interfaces without putting their money at risk,'' says Brad Hill, author of the Investor 2000 column at www.ragingbull.com, an investing site that provides research information as well as a Webcam on the Amex and Nasdaq trading floors. Newcomers should use demos and tours offered by most online trading sites to see which formats for monitoring a portfolio and tracking the market are most appealing to you. For the new investor, sites such as invest-faq.com and www.investorguide.com answer questions on everything from how to choose a broker to how to trade options. For ''moderately active traders'' who don't trade every day but do a lot of research and like to exploit market momentum, Hill recommends midpriced brokers, such as E*Trade, DLJ Direct, or Quick & Reilly (www.quick-reilly.com), for their competitive commissions, which are in the $15 to $20 per-trade range. But Donald Johnson, a retired college professor in Santa Rosa, Calif., takes another approach to broker-picking. His highly personal Web site recommends the best discount brokers based on feedback he receives from investors and a stock newsgroup called misc.invest.stocks. For active or day traders who want low costs and fast order execution, Johnson's top choice is Brown & Co. (www.brownco.com), for its commissions of $5 to $10 and ''excellent customer service.'' But he notes there is a $15,000 minimum to open an account. For more experienced investors or day traders, Cybercorp (www.cybercorp.com) offers Cyber X and CyberTrader. These platforms have direct links to stock exchanges and electronic trading system, so they can search for the best price and fill an order almost instantly, says company spokesman Trey Robinson. To help the active trader make quick decisions, the site's sophisticated, color-coded system mines huge amounts of data to produce instant graphic analysis on individual stocks and market trends. Even more charting is available through Prophet Financial Systems (www.prophetfinance.com), which also offers research and other features you can customize to stay on top of market developments. It costs $34.95 per month for a version with Level II quotes, which are what brokers and other pros get. If simpler research is more to your taste, users of Microsoft Excite, America Online (AOL), Yahoo! Finance, and many other Internet portals can create real or simulated portfolios and monitor their performance. To keep abreast of news affecting markets, sites such as www.bloomberg.com provide a constant stream of financial news. At www.cbsmarketwatch.com, you have access to news plus extensive market data, such as 52-week highs and lows, charts, and IPO information. BUSINESS WEEK's sister site, www.personalwealth.com, offers extensive free information and quotes and Standard & Poor's stock picks. For $9.95 a month, you can set up and track a portfolio, do asset allocation, and get up to 10 S&P company reports a month. And at www.moneycentral.msn.com, you'll find calculators for everything from whether to choose a Roth or traditional IRA to which type of life insurance is best. Brokers such as Fidelity and Morgan Stanley Dean Witter (MWD) (www.online.msdw.com) offer similar tools--and you don't even have to open an account to use them. Other useful free Web investing tools can be found at the Mutual Fund Education Alliance (www.mfea.com), which offers basic information and help with searching for a fund that meets your investment goals. Budding online options traders can learn the ropes at the Chicago Board Options Exchange site (www.cboe.com). To learn the ABCs of trading on margin- and short-selling, visit T. Rowe Price (TROW) at www.troweprice.com/brokerage. PARTY LINE. For those who are not satisfied with choosing stocks in isolation, there are always bulletin boards and chat rooms. But some sites elevate your opinion to the level of analysis--and some even offer monetary rewards to those with a good record of stock picks. Clear Station (www.clearstation.com) encourages you to develop a ''recommended'' list of stocks and share it with others on the site. You can sign up to receive e-mail reports on how the stocks on various participants' lists are doing, to help you to decide which member's advice to follow. Going one step further, at www.iexchange.com you can qualify as an ''investment analyst'' simply by registering with the site, stating your investment philosophy, and picking stocks. You can even write reports that the site distributes free to visitors, or earn money by selling them for a nominal fee. As soon as you start picking stocks, the site monitors your track record and makes it available to visitors, who can then decide if you're cutting the mustard. For those who are really frustrated fund managers, www.stockjungle.com offers yet another approach. You and other visitors to the site suggest stocks to buy. Then StockJungle's parent company invests 80% of the assets of the recently launched $305,000 Stockjungle.com Community Intelligence Fund in the group's collective top recommendations. The fund's current top holding is Lycos (LCOS), at 11.5%, followed by Sun Microsystems (SUNW) (10.8%), ITX (5.9%), Efficient Networks (5.5%), and Chase Manhattan (CMB) (5.2%). At its Dec. 10 close of $10.99, Community Intelligence was up 9.9% from its Nov. 18 debut. From basic research to trading and participatory stock-picking, the Web now offers something for any investor's needs. By ELLEN HOFFMAN _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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