#21 Investing with Technology

Stock Markets around the world took a bath yesterday (The Dow dropped a quick 416 points!). This got me to think about how technology has changed investing.

The advent of the Internet and on line trading has certainly changed how many people invest and their psychology of investing. For example, I woke up yesterday and found out via an email that the Chinese (and Japanese for that matter) markets had taken a big hit before our markets had opened. I'm sure many other investors saw that same news and the sell orders were out before the investing day started. That information, certainly, wouldn't have been widely known before the Internet nor could most take advantage of that data by placing on line orders.

In the old days (before the 90s), you couldn't get near to your broker on days of huge volume and price swings. Only the large institutional investors could get their attention. At best you could try and place in order and it MIGHT get exercised the day after. No more! Click, Click, Click and its done. You too can lose money with the pros!

I also find it interesting that the day traders have just about disappeared. An acquaintance of mine took off 3 weeks of work to try his hand day trading. Armed with 2 books on day trading, a high speed Internet connection and a good size nest egg he charged into the fray. He only lost about $20,000. Investing short term is worse then playing roulette. He is VERY glad he didn't quit his day job.

There are some nice benefits to technology and investing. The end of fractional $ for shares ( ½,¼, ⅜, etc) is one that I appreciate. On line investing moved us to decimal pricing and I'm glad they did. There is also a ton of investing information now available. I use Charles Schwab and their on line stock and mutual fund information can help make educated decisions. In the past you totally had to depend on your broker. And they depended on their firm, which may or may not have a clue as to what kind of investments you should be making. The timeliness of the information was also suspect. Brokers are still out there (thank goodness says nephew John!) for those requiring investment guidance, but you can also do a fair job with weekend stock shopping on line.

Adieu!