MANAGING YOUR MONEY / Earning More, Keeping More : FINGERTIP FINANCE : <i> With a computer, a modem and a telephone, investors can trade securities or just get some friendly advice.</i>
When Robyn Greene first logged on to Compuserve’s investor’s forum three years ago, she was convinced that a drop in interest rates was a short-term aberration that would soon reverse itself. Like many small investors, she figured all she had to do was keep her money in a money market fund until rates went up.
But after several on-line discussions with a portfolio manager from Minneapolis and other investors like herself all over the country, the Miami attorney changed her mind.
“That was one of the best things that happened to me,” says Greene, who instead made a killing in long-term bonds. “I met people who were able to give me useful information about what I was doing. Portfolio managers, money managers and people who just know more than I do. Living where I live, they’re not the kind of people I’d be likely to meet in my day-to-day life.”
Greene--who has since become something of an on-line addict, volunteering her time to help manage the investor postings on Compuserve’s bulletin boards and using the service’s financial databases to put together bond yield charts--is one of a growing number of individual investors who are taking advantage of a new wealth of information available from on-line services.
With a computer, a modem and a subscription to one of these services (the major ones for financial information are Compuserve, Dow Jones News Retrieval and Prodigy) investors can make a local phone call and immediately trade securities on-line with an electronic broker or look at current stock quotes, historical data, price and volume charts, business news, company profiles and more.
Information, of course, is not free. Prodigy, for example, will charge you $14.95 a month for a subscription that includes company news, quotes, market information and the ability to set up personal portfolios, which are automatically updated.
The service charges an additional $14.95 a month for access to its databases of 5,000 stocks and 3,400 mutual funds, which can be searched by several different categories, and a feature called “stock hunter,” which runs the eight most popular stock selection models against the stock database to give you more detailed information about the stocks you’re interested in.
Compuserve charges $8.95 a month for its basic service, which includes stock quotes, a personal portfolio and a nifty mutual fund database provided by Money magazine. But access to its vast business and financial databases, which include bond ratings from Standard & Poor’s, TRW’s business credit profiles, analysts’ reports, real-time foreign exchange and commodity quotes and an electronic clipping service, can cost far more. Even the forums in which Greene got her good advice on interest rates cost extra.
America Online also has material of interest to investors, such as corporate press releases as they come out. The service’s monthly fee of $9.95 includes five hours of access; additional hours cost $3.50.
Dow Jones News Retrieval, which is geared specifically toward investors, costs $1.20 to $1.95 a minute, plus a $1 to $2 fee depending on the sort of information you request. Dow Jones also offers a cheaper flat-rate plan for after-hours users.
Despite all these charges, many investors find that the convenience and time savings make on-line investing worthwhile. When the alternative is a trip to the library to search through eye-watering microfiche--or subscribing to relatively expensive publications such as Value Line, or trying to get your broker on the phone during business hours--calling up information from your living room after work or at 2 a.m. can be an attractive option.
Other than general news, Prodigy says the financial features are its most frequently used service, with more than half its 1 million subscribers logging on to get investment information. And a recent American Assn. of Individual Investors survey of its 150,000 members found that nearly 25% use on-line databases for investment information.
“The more information you get, the better off you are in investing,” says Paul Garverick, a research analyst with the Chicago-based association.
“And it automates the investment process. You get tired of looking up 20 different stocks in the paper every day--this adds a lot of ease of use,” he said.
Garverick notes that all the information available on line is available elsewhere, and cautions against getting carried away and spending too much time rooting through all the on-line data.
But what’s not available in the newspaper or at the local library is what many on-line investors enjoy most: meeting people with similar interests whom they would never run into outside of cyberspace.
The advice may not always be sound, but at least it’s interesting. Witness a recent exchange on the “misc.invest” news group, or special-interest area, on the Internet, the worldwide network of computer networks, between users from San Diego to New Jersey.
User 1: “Anyone on the net have any luck selling Snapple short? Last week I decided to consider it and found that my broker . . . did not have any inventory of the stock to use for short sales. Apparently there is a LOT of short interest already . . . to the point where there is a short(age) of stock to sell. . . . Does this happen often?”
User 2: “I’m not sure why you would want to short it right now, it’s just recovered from the bad press about insider sales and will probably have some kind of run-up on the split next week. You want to short at the point of maximum insanity.”
User 3: “IMO (cyberslang for ‘in my opinion’), those insider sells are the beginning of the end. Snapple just can’t compete against companies with the marketing prowess of Pepsi and Coke. Remember California Coolers? First doesn’t mean it will survive.”
User 4: “Huh? There is Snapple everywhere I go! A lot of people now drink Snapple instead of Coke & Pepsi. Besides, wine coolers were vile and Snapple is good. The stock may be crazy, but the company is sound.”
On-line aficionados say the real beauty of electronic communication is that it’s possible to find almost anyone with any interest somewhere in the electronic world. If you’d rather discuss oil prices, just click your mouse.
TIPS
There are several on-line computer information services, each with its own pricing guidelines and products.
Here are the toll-free numbers for some of the largest companies.
* America Online, (800) 827-6364
* Compuserve, (800) 848-8199
* Dow Jones News Retrieval, (800) 522-3567
* Genie, (800) 638-9636
* Prodigy, (800) 776-3449
