Do Try This at Home
It was a striking question, posed as much as a complaint as an accusation.
Wasn’t it a certain sign of the end of the bull market, asked an investor, that thousands of souls had shown up for The Times’ Investment Strategies Conference at the Westin Bonaventure Hotel over the weekend?
Was it not a contrarian indicator of sure market doom, he asked, sweeping his hand around the vast California Ballroom, that nearly 1,300 would show up at 9 a.m. on a Sunday for a panel discussion about investing on the Internet?
He compared the moment to that of the late 1980s real estate market in Southern California, a period when, he said, barbers and 7-Eleven clerks started getting real estate licenses. Everyone knows what ensued for Los Angeles home prices, he said.
A couple of panelists answered politely, and I bit my tongue after a short and snippy remark of my own. Good thing, because a longer answer might have seemed unkind from one’s host, especially so early in the morning.
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Here’s my real response: The guy might well turn out to be right. But even if he is, that attitude--and it’s widely shared on Wall Street--smacks of the sort of elitism and condescension that has turned so many smart private investors away from established brokerages and toward the Net.
Instead of fretting over whether store clerks and shoeshine boys really have the wherewithal to become private investors, we should be celebrating the notion that the Net has actually made it quite possible for them to do so.
Indeed, any sentient human being with a computer, a modem, a phone line and sufficient motivation can access enough free financial information online about public companies to become almost as informed as any hotshot mutual fund manager in Manhattan.
Here’s a simple example. Say you expect the Internet boom to continue and are considering the purchase of computer networking equipment maker Cisco Systems Inc.
Your first stop would be its home page on the World Wide Web, https://www.cisco.com
There you can read about its products and mission, learn about its sales strategy and other matters. Most important, you can also access its latest annual report (https://www.cisco.com/warp/public/749/arindex.html) and pose any sort of question to its investor relations staff. The speed and quality of a firm’s e-mail responses alone can speak volumes about its appreciation of or indifference to shareholders.
Next you might visit the home page of the federal Securities and Exchange Commission (https://www.sec.gov), where you’ll find links to the incredible financial database called Edgar (https://www.sec.gov/edgarhp.htm). This federally funded project may well be the best single reason for investors to go online: It allows one to easily read or download copies of every quarterly, annual and special filing required of public companies by the government.
I always read through the latest 10Q, 10K, S3 and 13D filings of companies in which I invest, paying extra attention to sections such as “risk factors” and “liquidity.” The feds hate it when companies aren’t honest in these reports, so the reports are reliable and investors can gain real, detailed insights.
Then you might check out the current price of the stock by pointing your Web browser at the home page of a quote provider such as Digital Broadcasting Corp. (https://www.dbc.com) or PC Quote (https://www.pcquote.com) or Quote.Com (https://www.quote.com).
Most of these guys also provide additional information, such as 180-day or one-year historical charts, complete with 50- and 200-day moving averages. DBC also includes a short excerpt from the authoritative MarketGuide handbook, including key financial ratios such as book value, return on assets and the dividend yield.
Then you might want to find out what current investors are thinking about Cisco, so you could surf over to Silicon Investor (https://www.techstocks.com). This is one of the most popular real-time bulletin boards for serious investors in the securities of high-tech companies. You can register for free, then punch “Cisco” in the search field on the first page to find half a dozen discussion threads on the company. Look for the one that appears to have the greatest number of messages recently, and start reading at any point in the discussion.
Next you could point your browser to a Web site called Interactive Quote (https://www.iqc.com), which provides terrific free technical analysis charts of stocks, as well as a tutorial on technical analysis. For dessert, you might swing over to the fascinating new Web-based daily investment newsletter called TheStreet.Com (https://www.thestreet.com), which I’ve covered before. Contrary analysis of Cisco there might change your mind about a purchase.
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Finally, after a few hours or days of research, you might visit an Internet-based deep-discount brokerage such as Lombard (https://www.lombard.com) or American Express Financial Direct (https://www.americanexpresss/direct), sign up for an account and make a trade, long or short.
To drive yourself crazy after that, I’d recommend browsing over to a Web site developed by Papyrus Technology Inc. (https://www.papyrus.com) to download free software called Internet Trader. The program offers a wide variety of unique, cool tools for investors, but the best is a so-called dynamic portfolio function that lets you watch tick-by-tick trades in your portfolio during the day. It is absolutely mesmerizing to watch your wealth rise and diminish before your eyes.
By the end of this exercise, it’ll be quite easy to understand how the Net has empowered 7-Eleven clerks, barbers and, heaven forbid, even journalists to make investment decisions on their own. It might even offer a clue to the secret behind the continued roar of the bull.
Street Strategies explores investment tactics. Jon D. Markman, who moderated panels on “Investing on the Internet” and “Strategies for Traders” at The Times’ Investment Strategies Conference, is a Times staff writer. He may use strategies discussed in the column for his own account. He can be reached at jon.markman@latimes.com
