There's a brave new world that Congress couldn't have envisioned when it created the Securities & Exchange Commission in 1934. Now in its infancy, the world of online investing promises to democratize the research and trading activity that Wall Street firms have worked assiduously to shroud in mystery, in order to keep investors large and small in their thrall. It's about time.
As our intrepid Net-surfer Gary Weiss found, online investing offers a leg up to the little guy who's willing to invest his time and energy. Information about companies, products, and stocks--free, unadulterated, and largely unbiased by the views of conventional research analysts--ricochets across the bulletin boards of the I-Way. Prospectuses can be downloaded in a trice. Stock market letters, replete with plugs and pans, can be pored over. And stocks may be bought and sold. For now, most big-name firms have steered clear of the Net--which makes plain sailing for the few discount brokers that operate through online services. This is no flash in the pan: The number of online brokerage accounts is expected to double in the next three years, from 600,000 to 1.3 million.
But the virtual world of investing isn't without its pitfalls. Just as in the real world, it pays to be cautious. Lots of misinformation--often obvious and easily spotted--passes for company or product news. More serious is the potential for abuses by scam artists. Boiler-room antics are easily adapted to the I-Way. So the SEC, which now has just a handful of folks perusing investor bulletin boards, needs to keep a more watchful eye on this growing phenomenon. Meanwhile, the budget-cutters, led by Senator Phil Gramm (R-Tex.), are suggesting that the budget for the SEC, now at $300 million, should be reined in. But when a whole new world of investing is aborning, this is no time to hamstring the agency.