Academic journal article Journal of Accountancy

Internet Investing Is Getting a Bad Name

Academic journal article Journal of Accountancy

Internet Investing Is Getting a Bad Name

Article excerpt

It's hard not to get caught up in the hype surrounding online investing. After all, you can't turn on the television these days without seeing clever advertisements from Internet trading companies exhorting would-be investors to "get rich quick" by trading stocks online.

The SEC, however, has drawn a line in the sand. In a recent speech, SEC Chairman Arthur Levitt warned investors about the allure of online trading.

"For most individuals, the stock market is best used for investing, not trading," he said. "Online trading may be quick and easy, but online investing requires old-fashioned elbow grease, like researching a company or making the time to appreciate the level of risk."

In short, online trading does not equal online investing.

On the other hand, Robert K. Doyle, CPA/PFS, of Spoor, Doyle and Associates, PA, in St. Petersburg, Florida, said he thinks online trading is great. It is bringing competition to the brokerage industry by giving people an alternative to high-commission trading. The increased competition means greater value for investors.

"But online trading is not for everyone," Doyle said. Agreeing with Levitt's comments, he advises those who invest online to be diligent about their research and to be prepared to deal with the service shortcomings of fast, growing online trading companies. …

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