Academic journal article Journal of Accountancy

Cyberspace Investing

Academic journal article Journal of Accountancy

Cyberspace Investing

Article excerpt

It's fast, it's convenient and the resources are vast.

A friend tells you she's heard good things about XYZ Co. You call your stockbroker to get more information. The line is busy. When you finally get through, he's out to lunch. An hour passes before he rings you back.

"What's the price of XYZ?" you ask.

"Up four points in the last hour."

Whether you invest for your own account or work as a financial adviser, if you had used the powerful tools of the Internet, not only could you have done the research yourself but also you could have instantly bought the stock and earned those four points---all with a few mouse clicks.

Cyberspace investing, while still in its infancy, is one of the fastest growing uses of the computer today: An estimated 14% of users who have Internet connections either access investment information or trade securities while online.

The flood of people wanting to do their investing and banking online has not gone unnoticed by the financial community. Investment firms, such as Fidelity, J.P. Morgan, Charles Schwab and Quick & Reilly, have created cyberspace locations where investors can access their accounts and conduct their investing and banking business. Some of the sites are on the Internet's World Wide Web (often referred to as "the Web" or "WWW") and others are essentially electronic bulletin boards directly accessible by telephone. For more information about some of the organizations mentioned in this article, see the sidebar, "Online Investing Resources," on page 66. Since new sites (also called "home pages") on the Web are added nearly daily, those interested in cyberspace investing should conduct searches on the Internet, using any of the following key words: investment, stocks, bonds and mutual funds.

MATCHING YOUR NEEDS

Some World Wide Web sites are very sophisticated. For example, on Bank of America's home page a visitor is invited to fill out a personal profile on investment interests. In subsequent visits, the Web site automatically brings together new information and financial tools that match the visitor's profile. Online investing takes varying approaches.

* Direct dial-up Investors access their accounts directly by telephoning the investment organizations through their computers using conventional communications software or the communications modules provided in Windows and Macintosh operating systems. Once connected, an investor can then retrieve stock quotes and company information and even place buy-and-sell orders-- with no need for an intermediary Internet provider connection, such as CompuServe or America Online. Examples of such direct (non-Internet) cyberspace trading locations are Quick & Reilly, Max Ule and AccuTrade.

Many brokerage houses offering direct dial-up connections also can be accessed via commercial Internet providers. From the user's point of view, the only difference between the two services is aesthetic: Direct dial-up screens often lack the colorful graphics of the Internet providers. Nonetheless, the direct dial-up approach is relatively simple, quick and effective. In some cases, to access an investment account and to transact business using direct dial-up, the user must pay a set-up charge or purchase special proprietary software or both.

Some examples of direct dial-up services that require special software from the investment firms: Fidelity Online Xpress, offered by Fidelity Investments; Siebert OnLine, from Muriel Siebert & CO.; Quick & Reilly's recently introduced QuickWay Plus; and Charles Schwab's StreetSmart. All offer securities trading, stock quotes, research and portfolio management online. The cost for the software generally runs about $50, although in some instances (such as Siebert OnLine) all or part of this cost is waived depending on the size off your account. Several investment firms (Quick & Reilly, Max Ule and E*Trade) also have set up electronic links with the major commercial Internet providers to give investors multiple access paths to their brokerage accounts. …

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