Electronic Investing Part II: An Electronic Investment Strategy
Last week I discussed the Internet stock trading services. This week, I consider how the Internet can be used to make smart investments.What does this have to do with Web multimedia? Investment information services draw on vast databases and create up-to-the minute graphs on the fly. They are a tremendous testbed for real-time visualization of data and perhaps the best consumer application for this technology. Some of these services, like Silicon Investor, are Web communities for individuals with an interest in stocks that offer such things as member-created discussion forums and personal identification pages.
Additionally, the market for technology stocks is a fairly good indicator of the direction of Internet technology. Looking at the investment climate is a smart thing for anyone in the Web content creation business to do--and maybe a way to turn knowledge of the medium into some extra money (but don't count on it).
Some Guidelines for Online Investors
Study the companies you're interested inGo to their Web pages--these usually contain sections devoted to investor relations and an archive of press releases. Search for references to them on the Web, in newsgroups, in publications like the online Wall Street Journal, and in discusions at Silicon Investor.
EDGAR or Electronic Data Gathering and Retrieval, a database of the Securities & Exchange Commission, transmits company documents to investors. Those documents include 10-Qs (quarterly reports), 8-Ks (significant developments such as the sale of a company unit), and 13-Ds (disclosures by parties who own 5% or more of a company's shares). Smart Edgar is a commercial service that provides instant access to the most recent filings for a fee of $29.95 per month.
Look for bargains
Many stocks trade in a wide price range in relation to their earnings.
It's easy to spot stocks at the low end of their 52-week range. The daily
newspapers and most quote services show the 52-week high and low prices.
Quote.com has a feature
called "Low Alerts," which shows a list of the stocks trading at or near their 52-week
lows.
Look at the graphs
If you see a stock you think is a good prospect look at graphs of its short-
and long-term behavior. This will tell you when it was high and low,
whether it's cyclical, and whether it moves with the industry or with the
market indexes. You can also see what events might have caused it to rise
or fall dramatically. Graphs of a single day of trading can show you how a
stock flucuates during the course of a day and the number of shares that
changed hands at that price.
Quote.com let's you view stock performance over the long term or the current day close up, with points just five minutes apart.
The following is a recent daily chart for Microsoft showing trading at five-minute intervals. The vertical lines show the range of prices that the stock traded at during the period. The graph illustrates how dramatically discontinuous the transaction environment really is--prices can range a whole point up and down during one five-minute period.
Quote.com also offers "intraday" charts of the major indexes like the Dow Industrials, the S&P 500, and NASDAQ.
Silicon Investor provides graphs of individual stocks, but it also allows users to create comparison charts representing up to seven companies on the same graph. The stock's relative behavior is indicated by its percentage change up or down from the starting date.
Look at the industry
Sometimes whole industry segments are down even though the individual
companies are fundamentally strong. This is happening now in the
semi-conductor sector, where a number of companies with good earnings and
outlooks for the future are trading near their lows because of the decline
in prices for memory chips.
Quote.com, Silicon Investor, and internet.com's Internet Stock Report offer detailed information and commentary about particular industry segments. You can get a good idea of what's happening to a stock by looking at what's happening to stocks in that sector.
Listen to what other investors are saying
Silicon Investor and the newsgroup misc.invest.stocks are
excellent places to trade information with other investors. But remember many of the people
who post have biases for or against the stocks they've just made or lost money
on, so expect to hear a lot of euphoria or bitterness. If you belong to an
online service like AOL, you
can also participate in its investment sections such as "The Motley Fool."
There is also online chat for members of Day Trader's Online.
Keep abreast of the news and the market
Stock movements often are a function of large-scale political and economic
events that have little or no direct connection to the stock you're buying.
The Dow was recently strongly affected by a state court judgment
against a tobacco company that sent tobacco shares plummetting. That day
the whole market suffered, even technology companies that had no visible
connection to the tobacco industry. The market is also affected by the
flow of money into mutual funds, inflation, unemployment rates, and interest
rates.
Dow Jones offers a number of sites for investors ranging from Telerate to the Wall Street Journal to a site devoted to the Centennial Anniversary of the Dow Jones Industrial Average.
The London Financial Times also has an Internet version with information about International financial markets.
Media Logic offers the Economics/Markets/Investments Index, a searchable index of information for investors.
The Data Broadcasting Service offers quotes, news, and a number of other resources including an excellent glossary of financial market terms.
InvestorsEdge offers similar information. Like the online Wall Street Journal, it is now being offered free to users of Microsoft Internet Explorer 3.0--yet another content resource Microsoft is using to lure surfers to its browser.
Briefing.com from Charter Media, Inc. offers timely news briefs about company earnings and such things as takeover rumors.
The Pitbull Investor provides quotes and information about a variety of financial topics including Options trading.
Zack's Investment Research Analyst Watch on the Internet offers access analysts' earnings estimate revisions for $29.95. This really is significant because so much stock movement is a result of whether a company's earnings meet, fail to meet, or exceed the expectations of analysts. Many stocks have been hammered because they reported earnings slightly lower than expected while others, like IBM in the last quarter, saw its stock shoot up because earnings were not as poor as had been expected. Having access to this information puts individual investors on a level playing field with institutional investors.
For people who like to invest in low-priced stocks, Kostech SmallCap Research is in the business of "Alerting subscribers to stocks under $10 with significant growth potential."
For the full-time electronic trader there's Day Trader's Online, a community for news and chat about investment topics for short-term investors--the guys who make a living timing the markets to the minute. In the same vein there's Wall Street Online, a resource for "active traders."
There is even software for tracking stock and funds, the Wall Street Tracker from the Tracker Family of Programs "works using technical analysis and market momentum to determine when to buy, sell, or hold stocks. The program compares three moving averages against each other and then compares each moving average to the current price. You can even look at different "what if" results based on your investment objectives and diverse criteria."
Use a little horse sense
To make money investing it takes more than just information. The standard
tips for investors usually contain the following admonitions: Don't be
greedy, be patient, and diversify. Most important, don't bet the farm on
a hot tip because you never really know.
Good luck, I hope you make some money.
Disclaimer: Neither internet.com Corporation nor Gary Welz makes specific trading recommendations nor gives individualized market advice. Information contained in the Internet Daily Stock Report is provided as an information service only. internet.com Corporation recommends that you get personal advice from an investment professional before buying or selling stocks or other securities. The securities markets are highly speculative areas for investments and only you can determine what level of risk is appropriate for you. Also, users should be aware that internet.com, internet, its employees, and affiliates may own securities that are the subject of reports, reviews, or analysis in the Internet Daily Stock Report.
Although internet.com Corporation obtains the information reported herein from sources it deems reliable, no warranty can be given as to the accuracy or completeness of any of the information provided, or as to the results obtained by individuals using such information. Each user shall be responsible for the risks of his or her own investment activities, and in no event shall internet.com Corporation, its employees, agents, or affiliates be liable for any direct, indirect, actual, special, or consequential damages resulting from the use of the information provided.
