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POWER LUNCH - Gomez . com - Founder - Interview
Consuelo Mack
02/04/99
CNBC/Dow Jones Business Video
(c) Copyright Federal Document Clearing House. All Rights Reserved.
CONSUELO MACK, CNBC POWER LUNCH ANCHOR: More
problems this morning for E*TRADE (EGRP). For the second day in a
row, the online trading system at the leading online brokerage firm is
experiencing glitches, it says mainly due to software malfunctions still. But
is this is a warning, a sign of more problems to come as online trading
volume continues to surge? Well, joining us to discuss the online outlook
is Julio Gomez. He's founder of gomez . com and Gomez advisors, an
Internet research firm. He joins us live from Boston. Julio, nice to see
you.
JULIO GOMEZ, FOUNDER, GOMEZ . COM : Nice to see you too
Consuelo.
MACK: How concerned are you about what's going on with E*TRADE
today?
GOMEZ: Well, I'm very concerned, because in general, online investors
are very disappointed about problems not just at E*TRADE but many of
the other firms. Basically, what we're going through here is an industry
that's experiencing severe growing pains and E*TRADE which is an
aggressive marketer has been driving traffic and customer growth to a
level where it's severely taxing their capacity.
MACK: So what's the outlook? Are we going to see more of these
outages as online trading which is just, I think it was up what 25 to 50
percent or something last month. As it continues to surge, are we going to
see a lot more of these problems? This is not isolated to E*TRADE,
right?
GOMEZ: That's correct. Yeah, we're going to see continued sporadic
problems. The problems with E*TRADE inaccessible trading that started
yesterday and continued today. It's not the end of it. They're not
continuous problems. On our gomez . com finance community, we have
message boards where people are discussing these things, and they seem
to come in waves. What we're advising investors to do right now
however is to set up their own form of excess capacity by opening a
second brokerage account at some of the less popular sites.
MACK: So any suggestions as to where they should go?
GOMEZ: Well, yes. I scoured the message boards and found a few firms
that are, seem to be immune to some of these complaints. Quick & Reilly
(BQR), National Discount Brokers (NDB), Mr . Stock, Wangvest.com,
Trading Direct and My Discount Broker seem to be taking it all in stride
right now. They don't have all the features and benefits of some of our
top-ranked firms, but in a pinch if you need to get off a trade, it helps to
have an alternate course of action.
MACK: It's important to be able to trade. All right, now you have an
Internet brokerage score card and E*TRADE was the number one online
broker for a number of reasons. And we've got a picture right there of
what you're ranking has been. Does this change the ranking in that survey
do you think?
GOMEZ: Well, we're in a tough spot because our criteria is objective.
You either have free real time quotes or you don't. You either have
access to institutional research, or you don' t. However, if people can't
get at it, that presents another set of problems. So we have a
performance measurement as part of our criteria and it should have an
effect. However, it's kind of like Furbies. You know, my daughter
wanted a Furby for Christmas and guess what, Santa couldn't deliver. So
no matter how great a Furby is, if you can't get access to it, you're going
to be disappointed.
MACK: Are we going to see more problems as other firms upgrade as
well? You've already told us what we should do is go to one of the less
used sites. I mean is this just a growing pains that we're going to see
throughout the system.
GOMEZ: It is. This is rapid growth. This is the most popular product
ever introduced in financial services, and brokers are doing all they can
and throwing money at this problem to keep up with the growth.
MACK: All right, so keep your options open, it sounds like if you're
trading online.
GOMEZ: If it's mission critical, you should.
MACK: All right, Julio, thanks for joining us. We appreciate it.
GOMEZ: My pleasure.
MACK: We've been speaking with Julio Gomez, of gomez . com and
Gomez Advisors, live from Boston.
END
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