Beeper Brokers (Forbes, April 5, 1999)
By Bruce Upbin
Source: forbes.com
During the lunchtime rush at his sushi restaurant in Scripps Ranch, Calif.,
Hui Choe suddenly makes a run for the office behind the kitchen. A surprise
visit from the health inspector? Nah. The stock markets are about to close,
and Choe's wireless Quotrek has beeped, signalling that America Online is up
$4, to $90. Choe whips out his other wireless device, a two-way pager,
punches a few buttons, and in a matter of seconds he has sold out his shares
in AOL and used the proceeds to buy on-line music retailer N2K. Trade
confirmation zings back from brokerage Muriel Siebert, and Choe gets back to
his fish.
Wireless trading is probably more conducive to compulsive gambling than to
building a retirement portfolio. But if you are a hyperactive trader anyway,
why not get the latest technology?
It's been only a few years since on-line trading first wowed investors, and
now even that technology is about to look old. Mobile, wireless trading is
going mainstream. A New York trading software firm called w-Trade
Technologies has offered mobile stock and options trading through small
brokerages for about a year. There are only perhaps 20,000 wireless traders
now, but that will soon change. New York-based Siebert, which started its
service in January, claims to have doubled its rate of new account openings
since then. Siebert is using technology developed by Fidelity Investments,
which started offering its "InstantBroker" wireless service in October.
Discover Brokerage, the discount arm of Morgan Stanley Dean Witter, will
launch a wireless service in a couple of months. (Merrill Lynch, Charles
Schwab and E-Trade all say they have no specific plans to offer wireless
trading.)
Strictly speaking, wireless trading is not new. Any investor can use a
cellular phone to reach a broker's touchtone trading system (or a human, if
you can imagine). Wireless modems plugged into laptops can access brokers'
Web sites.
The latest wave of wireless trading is different. No PCs, phones or Web
services are necessary. All you need is a handheld device—either a
specialized pager like that used by restaurateur Choe, a palm-type electronic
organizer with a wireless modem attached, or a so-called smart phone—and an
account with a brokerage that supports radio trading.
You can trade while traveling, driving, eating out, playing golf or attending
your child's school play. You can program your device to silently vibrate
when a stock reaches a certain price. Then you can secretly trade—say, during
a business meeting—while pretending to take notes.
If that sounds heavenly, you'll first need to decide which brokerage to go
with. Some let you pick your device; others require one type. But ask about
the network first: Does it work where you're most likely to be? For now
Fidelity and Siebert have the best national footprint (all major metro
areas), using BellSouth's digital cellular network.
With Fidelity and Siebert you have to buy or rent a $359, two-way pager
made by a Canadian outfit called Research In Motion. The RIM pager is a neat
gadget that can send and receive e-mail, send faxes and leave voice mail
messages using creepy, synthesized speech. The pager runs for weeks on one AA
battery even with active trading. Besides the cost of the pager, you'll pay a
flat $50 per month for network airtime, plus trading commissions.
If you want unlimited quotes and more choice in hardware, consider Discover's
upcoming service or w-Trade's service offered through deep discounters like
Investrade or R.J. Forbes (no connection to this magazine). They use either
the BellSouth network with a RIM pager or a digital network operated
jointly by AT&T, Bell Atlantic and others. The latter network won't cover Los
Angeles, Atlanta or New Orleans until at least the end of the year but it
gives you the choice of a Palm Pilot or Windows CE-based organizer such as
the Philips Nino or Hewlett-Packard Jornada or a smart phone.
The organizers have big screens—great for viewing charts—but can drain
batteries in a day or two with active use. Figure $400 to $800 for the unit
and a detachable wireless modem, and $60 or so per month for unlimited
network time. Smart phones like the Samsung Duetté or Mitsubishi MobileAccess
are cell phones with built-in modems and Web browsers. They retail for around
$500, but you can usually get one for $100 or less with a one-year network
contract. James (Beau) Hailey, director of marketing for a Dallas-based
placement firm, got his Samsung smart phone for free from Investrade when he
opened a $10,000 account. He trades with it several times a day and says it
works as fast as his home PC.
A word about speed: With data transfer rates no greater than 19 kilobits per
second, today's networks are fine for getting quotes and sending trade
orders, but a bit slow retrieving news stories or charts. And wireless
trading will not protect you from communication bottlenecks if the market
crashes and Web sites get jammed up.
Security? Digital networks are hard to snoop on and trades are encrypted. No
one can use your device to trade without your personal ID number. If you want
to worry, worry about your own self control. Are you building a portfolio or
an addiction?
Also see the accompanying table at
forbes.com |
