On-Line Investing

by

Your Webmaster
Kensey Alsman

Discount brokerage firms on the Internet are now able to provide more timely information and service than ever before and it has created an exciting new market for investors. This is a bonanza for those of us who, in the past, invested with traditional brokers where transaction costs ran as high as 50 cents per share per trade.

The primary function of traditional full service brokers is to help you make wise decisions about the stocks or other investments you choose to buy. Another important function they serve is hand-holding while you sweat out the performance of your chosen investment vehicle. Whether or not they actually perform any useful function is a matter of their individual abilities and skills. My own experience with them has not been good.

"Cement does not trickle . . ."

In the early eighties I once ordered up a hot communications stock called MCI. The broker placed the order and two weeks later when the stock had appreciated about 40 per cent I ordered him to sell it. To my dismay, I then discovered the stock he had actually purchased for me was CMI, a company that sold cement trucks. This was at a time when Ronald Reagan believed he could eliminate the Department of Transportation. He thought good roads and highways would trickle down to all of America. Cement does not trickle and this company's stock went south of the Laffer Curve.

" . . . his security goon drug me from the office . . ."

The only good thing about this experience was the eloquent invective it inspired in me that few people have ever matched. In my last meeting with this stock broker, though I don't recall the exact phrasing, I managed to use the words "demon spawn," "piss ant," and "bandersnatch" effectively in one sentence. I was cookin', baby. Someday I will have to make amends with that fellow so I can find out precisely what I said on that infamous day. He'll remember. He was writing it down as his security goon drug me from the office and manhandled me, with altogether unnecessary roughness, through the vestibule and into the parking lot. And, once released, I let her know what I thought of her brutal tactics.

Before you sign on with a "discount" broker you must ask yourself if you have the temperament and time to do most of your own research and if you are confident enough in your abilities to handle your own investment decisions.

". . . foolish means good . . ."

So, where can you get good, free investment advice? One place is on the web site called "Motley Fool" at www.fool.com. This site's name came from some pretentious Shakespearean crap that one of these guys (a pointy-headed ex-English professor) came up with. Once you get past the nonsense that "foolish" means "good" you will find some very good (foolish) information about stocks and strategies with an emphasis on long term (foolish) investing. They also sell books about money management that are worth checking out and they have a free e-mail newsletter you can sign up for. You cannot buy stocks through this site.

Where to buy stocks?

The following is a far from complete list of on-line discount brokers. We at Kensey Alsman are making no recommendations about these companies and this list is for information purposes only. A more exhaustive list can be found at Motley Fool and other places on the net.

Datek Online at www.datek.com/
This company says "Only Datek Online promises to rebate the payment for order flow directly to its customers." I have no idea what that means


Scottrade at www.scottrade.com/
I'm sure this company is named after "Scott" somebody or other, but this name, linked with low cost trades, smacks of a bad ethnic joke. Being, as I am, descended from Mary, Queen of Scots, it makes me edgy.


Ameritrade at www.ameritrade.com/


Suretrade at www.suretrade.com


E-trade at www.etrade.com/

Some of these companies claim you can trade for as low as $4.95 per transaction. They also provide real-time and after-hours stock quotes, bonuses, rebates, access to IPOs, and even check writing from interest bearing money market accounts. If you can't lose your money fast enough at the casinos, then check out the options trading. The action there is hot and fast and not for the faint of heart.

COMING SOON

According to our contract summary, Internet access to your 401k will come to pass no later than January 1, 2001 (the first day of the new millennium). And what a banner day that will be. It is the Webmaster's philosophy that the best way to handle a long term investment like a 401k is to keep a constant watch on it (check it out about every 15 minutes during a trading day) and churn that baby like a vat of raw, fat-filled milk. What's cool is - Ma Beth picks up the trading costs. Mark your virtual calendars.

ONE LAST TIP:

Mark Twain said the best way to handle your money is to put all your eggs in one basket and watch that basket. Mr. Twain was also a notoriously bad business man. The Webmaster's opinion: Don't Buy Bethlehem Steel or any other steel company's stocks. Between your pension, health insurance, ESOP, and weekly paycheck you already have way too much of your financial life and future tied up in steel.

Diversify and prosper.