Brokers keep developing tools but can investors handle them?

Good piece by David Bogoslaw at Bloomberg Businessweek on all the new technology/trading development going on in the online brokerage space.  It’s a well-researched piece and does a great job of going through each online brokerage (including the smaller startups) and outline what they’ve been working on.

Some of the interesting functionality profiled in the article includes:

  • shareable, backtestable stock screeners (TradeKing)
  • expanded 3rd party research (RiskMetrics available at Fidelity, Seeking Alpha at E*Trade, Ned Davis at Schwab)
  • Exceptional volume scanners (LiveAction at tradeMONSTER polls for unusual activity in the options market)
  • more complicated buy/sell triggers (a few brokers)
  • social media integration (most of them)

The Bloomberg Businessweek article ends with

With individual investors still spooked by the market meltdown of 2008-09 and by the sudden plunge in major indexes on May 6, the advanced tools that online brokers are providing could be a carrot that draws more people back to stocks—and gets them back in the habit of trading online.

Online brokerages misguided

I’m not so sure about this.  The online brokerages continue to develop tools and underinvest in education.  It makes sense — frequent traders are their bread and butter and in a commoditized space of trading, tools are one way (services are another) that help to differentiate.

Still, the average investor will never use these advancement and even if he/she could figure out how to use them, he still can’t answer whyAutomated professional-grade advice is what these platforms should be advancing if they want to really capitalize accounts leaving traditional brokerages.

Source: Online Brokers Upgrade Retail Investor Tools (Bloomberg Businessweek)

photo courtesy of D’Arcy Norman

Bloomberg beefing up reflects good things for financial industry

I’ve written about previously (here and here) about Bloomberg’s expansion bloombergand eventual dominance of financial media from news to data and consumer.  The WSJ reports today that indeed, Bloomberg is forecasting a respectable 10% growth rate for 2010 and plans to add an additional 1300 employees.

The revenue gains would come largely from a projected increase of 12,000 subscriptions to the Bloomberg Professional service, which provides data, analytics and news geared to financial-services professionals.

Bloomberg’s revenue for last year was estimated at $6.25 billion, according to a person familiar with the matter. Based on that estimate, the new projections would push revenue to nearly $6.9 billion this year.

Growth is good for Bloomberg and ostensibly, the media giant is seeing increased demand for its terminals from institutional investors — a sign that things are picking up on Wall Street and Stamford, CT.

With the recent acquisition of BusinessWeek and content sharing deals that land Bloomberg content on the WaPost and beyond, Bloomberg is turning up the manheat on Dow Jones.

Be afraid, be very afraid.

Investment newsletters REALLY bearish — time to buy?

Wow! Expectations that U.S. stocks will drop at least 10% has risen to the highest levels since April 1984.

In a recent survey of investment newsletters by Investors Intelligence, Bloomberg reports that:

The following are results from Investors Intelligence’s
analysis of investment newsletters for Jan. 27 through
yesterday. The company determines the proportion of writers who
are bullish and bearish on U.S. stocks, as well as the
percentage who anticipate a correction, or 10 percent decline,
in the market.

           This Week   Prior Week    Comments
Bullish      38.9%        40.0%      Lowest since July 21
Bearish      22.2%        23.3%      Lowest in two weeks
Correction   38.9%        36.7%      Highest since April 1984

Time to buy?