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Strategies & Market Trends : The Final Frontier - Online Remote Trading -- Ignore unavailable to you. Want to Upgrade?

To: agent99 who wrote (7785)	11/28/1999 4:48:00 PM
From: TFF	Read Replies (1) \| Respond to of 12617

Evidence mounting that online trading isn't for all Donald Ratajczak Sunday November 28 Now that enough day traders in securities have been at the task long enough, studies are beginning to be published about how well they've done. From Wharton to the University of California at Irvine, professionals have been concluding that electronic traders have, on average, been harmed by their activities. The most interesting study was done at Irvine, where performances were examined over a period of several years as investors shifted from relying on their brokers to doing their own transactions online. The study chose investors who, on average, outperformed stock market indexes by a few percentage points after adjustment for taxes before they shifted to online trading. The surprising result was that these same investors tended to trail stock market indexes by several percentage points after they became online traders. Two major changes were created by online transactions. First, investors lost the filtering and analysis of information being supplied by brokers. (To be sure, some brokers are little more than salespeople who may provide little value to their clients. Most of those cannot accumulate the assets necessary to justify their support over time). Second, the cost of transactions fell sharply. A lower cost for the same activity clearly is an advantage. However, many of these investors began "over-trading." Not only did they give up in cost from the number of trades what they saved per trade, they also lost tax efficiency in their investments. Almost every transaction became a short-term investment, where gains are taxed as ordinary income. If the investors had held their positions for a year, their capital gains would receive more favorable tax treatment. There also was evidence that excessive trading encouraged market-timing activity by investors. While quickly cutting losses probably is underdone for most investors, failing to extend gains appeared to be a more serious investment problem for these active traders. The desire to do something with the click of a mouse led to quicker, and usually less appropriate, investment decisions. Other studies show that many day traders become addicted and do not leave the game until all their trading balances have been exhausted. Interestingly, some of the large brokerage houses are beginning to reveal very large trading profits from their professional traders. A lifetime of experience, knowledge of a firm's own inventory and client trading tendencies and strong lines of credit provide substantial advantages to the professional trading desks. In other words, the professionals, on average, can take the benefits of trading away from the amateurs. Recent earnings reports from Wall Street tend to support this conclusion. A recent profile of a day trader in The New York Times Sunday Magazine described a person who periodically took winnings from his activity away from his trading and put them in more traditional investments. However, even those sums were used when a big "score" was apparent. I used the word "score" because that is what professional gamblers call their outsized bets. Not surprisingly, the day trader found blackjack tame in comparison to his electronic gambles. In other words, this successful day trader was acting the way a successful professional gambler behaves. His game was stock market volatility rather than cards or dice. Another surprise about online trading is that the assets held by electronic brokerage firms are not growing rapidly. Indeed, some electronic brokerage firms are paying much more to attract a given amount of assets than they have in the past. In an era when the projections of growth in e-commerce are exponential for business-to-business or retailing, this struggle to maintain current account growth even as more households become wired does not mark overwhelming success for the electronic brokerage houses. None of this should mean that traditional brokers can continue to offer the same services the same way to their customers. Choice has value, and customers must be given the choice to do their own online transactions. Those companies that do not provide that choice with ease and at a competitive price will not be around in the next century. I also must point out that alternative explanations can be provided for the bad performance from online investing. Economic environments change more quickly than economic behavior from individuals. Thus, those investors who were winners earlier in this decade may have had an investment philosophy that was not going to be as beneficial in recent years. (They may have been value investors, seeking undervalued companies. In the last three years, technology has ruled and value investing has generally overlooked the high-priced but rapidly growing technology sector). Thus, alternative explanations can be provided for the conclusions of any studies that examine behavior over time. Nevertheless, online traders probably should not lose the phone numbers of their investment advisers. Just as forecasters have discovered that models and experience are preferred to either models or experience alone, the online trader may learn that advice and quick, low-cost transactions may be preferred either to the advice alone or to the electronic trading. In the end, results must dictate what is best. If lower transaction costs do not encourage more transactions, then get online. If you are impulsive, or chase the hot investments, find a filtering device to delay your activities. But be cautious. Just because something is easy and inexpensive doesn't mean that it is good.

To: agent99 who wrote (7785)	12/1/1999 1:44:00 PM
From: TFF	Respond to of 12617

Merrill Lynch Launches Merrill Lynch Direct(SM) NEW YORK, Dec. 1 /PRNewswire/ -- Merrill Lynch (NYSE: MER) today launched an expansive online investing website as the latest component in one of the world's most complete packages of personal financial services for U.S. investors. "We're tremendously excited to be launching Merrill Lynch Direct(SM)," said David H. Komansky, Chairman and Chief Executive Officer. "Backed by the full global resources of Merrill Lynch, Merrill Lynch Direct combines content, intelligence and innovation to create the smartest place for the self-directed client to invest online. We are dedicated to the proposition that when our clients succeed, we succeed, and Merrill Lynch Direct completes our platform of choice for clients. No matter how you may wish to approach the market -- whether by working with a professional Financial Consultant or self-directing a financial portfolio online -- you can do it at Merrill Lynch." John L. Steffens, Vice Chairman and head of the US Private Client Group, noted that initial observers of Merrill Lynch Direct have described it as "powerful and attractive," "robust," "thoughtfully designed" and "easy to use." "Merrill Lynch Direct offers far more than just online trading execution," Mr. Steffens said. "With features such as real-time account positions, tax-management information, the Global Investor Network(SM) for research, banking services and online shopping with an exceptional Visa(R) Signature(SM) Rewards program, self-directed investors will be able to use this site to help manage all aspects of their financial lives." Madeline A. Weinstein, Senior Vice President and Director of the Private Client Business Innovation Group, said: "Merrill Lynch Direct complements, but does not replace, the value of professional advice and guidance provided by Merrill Lynch Financial Consultants -- particularly for those clients with sizeable and growing financial portfolios. That's why we've made it easy for clients to link Merrill Lynch Direct with multiple Merrill Lynch accounts." Merrill Lynch Direct is the latest in a series of innovative new products and services for U.S. clients. In June, Merrill Lynch initiated "Unlimited Advantage(SM)," a brokerage service in which asset-based fees replace traditional per-trade and other a la carte charges. Unlimited Advantage offers clients virtually unlimited transactions in most securities, the personalized guidance and advice clients have come to expect from Merrill Lynch Financial Consultants, the Visa Signature card and rewards program, individualized financial plans with periodic updates, eCommerce links and other services. Even before the launch of Merrill Lynch Direct, the company's online client services have received high ratings from independent evaluators. Merrill Lynch was rated the second-best online brokerage in a survey of 10 competitors by Forrester Research, Inc. SmartMoney magazine, in rating Merrill Lynch the "best full-service broker," also gave high honors for its online services. A fact sheet on Merrill Lynch Direct follows. Merrill Lynch Direct(SM) (mldirect.ml.com) With Merrill Lynch Direct, clients will have access to the following capabilities and resources: Unique Onscreen Displays & Features -- View an entire portfolio on one screen or select specific investment, retirement or other consolidated views. -- Monthly statements and annual tax statements online. -- Track realized and unrealized gains and losses and monitor intra-day activity. -- Account balances and available funds updated intra-day. -- Compare asset allocations to model portfolios prepared by Merrill Lynch professionals and designed to achieve a variety of investing goals. CMA(R) Account Automatically sweeps idle cash into an interest-bearing bank deposit account through Merrill Lynch Bank USA, while allowing purchases against the account through a Visa(R) debit card or checks. The CMA account also allows trades on margin. Merrill Lynch Direct also can be used to open an IRA, Roth IRA or an Individual Retirement Rollover Account. Investments Merrill Lynch has a long-standing reputation for integrity, financial strength, stability, flexibility to meet changing financial needs and the world's most honored professional research team. Online investment capabilities available through Merrill Lynch Direct include: U.S. Equities: Trading listed and over-the-counter stocks online from $29.95 or through customer service representatives at a slightly higher fee. Mutual Funds: Buy, sell or exchange more than 2,400 mutual funds, including load and no-load funds from more than 90 fund families as well as from Merrill Lynch's three fund families -- Merrill Lynch Asset Management, Mercury Asset Management and Hotchkis and Wiley. Fixed Income: Buy and sell from Merrill Lynch's large inventory of CDs, municipal bonds, corporate bonds and U.S. government securities, through service representatives. e-IPOs: The online IPO center is available exclusively to eligible Merrill Lynch clients who may review and indicate interest in initial public offerings and other new issues. Merrill Lynch, which will introduce the first of these e-IPOs in early 2000, is a market leader in IPOs and widely recognized as a global leader in equity underwriting. Information and Research Clients obtain help to make informed investment decisions through a wide variety of premier information sources that include: Merrill Lynch's industry-leading research; unlimited S&P Stock Reports; real-time Dow Jones News stories and headlines; S&P Stock, Bonds and Earnings Guides and Dividend Records; as well as daily news feeds from PR Newswire and Business Wire. Global Investor Network(SM) (GIN) An exclusive Internet multimedia platform featuring investment research in streaming video, the GIN is updated daily with timely audio and video reports from Merrill Lynch analysts, economists, mutual fund managers and financial planning experts who cover markets around the world. It represents the first daily use by a financial services company of technology that combines video research information and analysis with the Internet. The GIN is designed for clients who can view the reports through Merrill Lynch OnLine and Merrill Lynch Direct. It uses Merrill Lynch television cameras in Hong Kong, London, Frankfurt, New York and Princeton, N.J. Plans call for installing cameras in Tokyo, Singapore, Sydney, Madrid, Mexico City, Boston, and San Francisco. Features include: -- The Daily Call, a summary of analysts reports. -- Analyst Highlights, a video research commentary on a specific company. -- Mutual Funds Update, a video presentation from a mutual fund manager. -- Street Beat, exploring various trends in the marketplace. -- Global Investor News, an overview of the day's market happenings. -- Money Sense, a feature highlighting programs offered at Merrill Lynch, such as International Savings Month or the Women's Sports Foundation. -- Fixed Income, covering the bond market. Veteran television network newscasters conduct on-camera interviews, anchor the network's news segments and provide economic and business news analysis from around the world with Global Investor Network International Reports. Electronic Bill Payment Convenient electronic bill payment may be accessed either through the Merrill Lynch web site, or the client may download account holdings and activity into Quicken personal finance software programs. Online Financial Tools Clients have unlimited access to: -- Real-time stock quotes. -- Stock, mutual fund and fixed income scanners. -- Retirement, education and savings goal calculators. -- Comprehensive investor education information. -- Asset allocation and other extensive charting capabilities. CMA (R)Visa(R) Signature(SM) Card Clients may acquire a Merrill Lynch CMA Visa Signature card, which offers the most extensive travel and rewards program of any Visa card available. Points are earned every time the card is used to make a purchase and can be redeemed toward travel on any airline, anytime, anywhere, with no blackout dates. Points may also be redeemed for valuable merchandise and other travel services, or applied toward payment of fees and commissions at Merrill Lynch. eShopping Merrill Lynch's eCommerce portal offers individuals and small businesses access to more than 450 vendors, from Toys 'R Us to Barnes & Noble Inc., and more than eight million products. Clients earn triple Visa Signature points for purchases made with the Visa Signature card and may also receive special discounts from participating merchants. Bullhorn(SM) Clients may sign up for this free service to receive timely e-mail messages with Merrill Lynch's "Focus 1" stock selections and news about special online events and site enhancements. Customer Service Open 24 hours a day, seven days a week, to answer client questions via e- mail or telephone.