Are you thinking it might be time to test the stock trading waters again? On the occasional good day on Wall Street it may seem that the year-long stock clearance sale coming to an end, but you don’t want to end up as the bad poster child of “Don’t let this happen to you.” Arm yourself with good old-fashioned research on the Web before choosing your investment portfolio. Just point and click, and you’re in the stock game – along with a lot of other folks.
Roughly 200 securities firms offer online brokerage services and there are over 10 million online accounts, according to the North American Securities Administrators Association.
To see if you have what it takes to trade stocks online, you need to gauge your ability. Take the online quiz for your investor knowledge at the Investing Online Resource Center (IORC), a non-commercial organization at www.investingonline.org. The organization sets out some basic facts about online investing and outlines the rights of online investors and lists dispute resolution alternatives.
Bear in mind that there is a world of difference between the occasional online investor and the cyberspace day trader.
Local technology leader Mitch Ratcliffe says, “For the novice, caution is the word of the day.” Ratcliffe has been a commentator and journalist on the tech scene for the past decade. He also served as vice president of content and chief content officer for ON24 Inc., the online streaming news and financial information network. He currently operates Internet/Media Strategies, Inc. at www.ratcliffe.com.
Ratcliffe offered his tried and true tips and online picks to research your investment prospects.
Q: What general tips can you offer those who want to invest online?
Ratcliffe: It makes a lot of sense to start small and stay diversified. Diversified means you don’t have all your investments in one sector of the economy or one type of investment, whether its securities or bonds or otherwise.
Don’t bail out on mutual funds. Actually, for securities professionals, it’s illegal for them to trade in mutual funds. That is to suggest you get into a mutual fund one day and then sell it three days later to try and take a gain and then gain and put it somewhere else. That is an illegal practice and no investor should ever be suckered into.
It’s important to keep an eye on costs. You sign up for one site and they cost $9.95 per trade, but they may be for only one particular kind of trade. If you get into something else like options, you end up paying much more every time you do a transaction.
Q: There is a plethora of Web sites that can help online traders. You’ve worked with a lot of these sites in your position at ON24.com. Tell us some of your recommended online resources.
Ratcliffe: I think my obvious favorite is On24.com, the company I helped build. It’s a streaming news site for individual investors and you can actually track the companies you’re interested in. You get audio and video interviews and conference calls delivered right to your desktop.
But I think the best of all the free sites is CBS MarketWatch (cbs.marketwatch.com) which aggregates all of the reporting from the CBS news networks and other sources and gives you very, very deep and easy to explore information.
I think that Yahoo.com, which has Finance.Yahoo.com, is an excellent resource because you can get so many different perspectives and so much information there. They’ve done a lot even in the last few months, despite the economic downturn in trading, to improve the tools available on Yahoo Finance.
I also read both the Wall Street Journal and the FT.com (Financial Times) online every day.
Q: Is Bloomberg a good resource?
Ratcliffe: Bloomberg’s an excellent if you can afford the high-end service they deliver. The Bloomberg terminals cost about $1,300 a month and are really only available to the professional investor. There’s so much information on these things, you just can’t imagine. You can find out every aspect of a company, who works there, how much money they have. It’s actually kind of frightening. At Bloomberg.com you can get all the information and charting, but it’s just not delivered with the kind of unified interface that makes it really easy to understand what all this stuff means.
Q: What are your thoughts on what’s happening to the market right now? Do you think we’re seeing the market climb again?
Ratcliffe: No, I don’t. I think we’re going to see a certain level of highs and lows for a long time coming. I think expectations about technology stocks in general are quite overblown at this point. We’re not into a major recovery. There are not a lot of signs of companies deciding to spend a lot of money on new technology. I wouldn’t look for the market to take off in any sense of the way it did between 1998 and 2001.
The full audio discussion with Mitch Ratcliffe can be heard via streaming audio at www.webtalkguys.com under the April 6th radio show.
Dana Greenlee is a Web designer and co-host of the WebTalkGuys Radio Show, a Tacoma-based talk show featuring technology news and interviews. It is broadcast locally on KLAY 1180 AM Saturdays at 11 a.m. The show is also on CNET Radio in San Francisco and Boston, on the Web at www.CNETRadio.com, www.WebTalkGuys.com and via the XM Satellite Network and on NexTel’s Wireless Web. Past show and interviews are also Webcast via the Internet at www.webtalkguys.com