How a home computer speeds stock trades
The green letters and numbers on the black screen are fairly self-explanatory. There is a list of companies, or at least their stock-symbol abbreviations. Next to each is the current price of each stock, the previous day's closing price, and the size of any price change.
The Apple IIe, equipped with sound, breaks the placid scene.
There it goes again. If he wasn't before, the person sitting at the computer is now looking intently at the screen. Some of the numbers are changing.
Every time there is any activity in one of the stocks listed, the computer beeps and the bright marker on the screen, the cursor, points to the stock as the new price is listed.
The continual beeping is more than the sound of stocks being traded. It also represents the emergence of the personal computer as a tool for buying and selling stocks, bonds, and options. One discount brokerage, C.D. Anderson of San Francisco, has been offering its customers such a service since last July. But most of C.D. Anderson's customers are on the West Coast.
So when Fidelity Investments of Boston announced its Fidelity Investor's Express several weeks ago, it led what is quickly becoming a nationwide effort to let stockholders buy and sell securities from home, as long as they have a personal computer, a telephone, and a modem to link the two.
In addition to C.D. Anderson and Fidelity, New York-based Max Ule & Co. lets its discount brokerage clients place orders outside business hours. So if you get an investment inspiration in the middle of the night, you can send the order from your computer and have it waiting in the the broker's computer in the morning. Ule charges a $39 registration fee and access fees of 21 cents per minute during the day 10 cents a minute at night.
Fidelity charges a $195 registration fee to let a client trade while the market is open. (Through May 31, the fee is $49.95.) Access charges are 40 cents a minute during peak hours, 10 cents a minute off-peak. The minimum monthly access charge is $10.
None of these services actually allows the customer to buy and sell stocks directly. That wouldn't be legal. The customer's investment request is sent through the computer to the broker, who then places the order with the various stock exchanges.
Almost all of the investing-by-computer services come from discount brokers. E.F. Hutton, however, is one of the few full-service brokers so far offering personal computer services, though it does not permit trading. You can leave messages for your broker, check your transaction records, and read business news briefs to help you make investment decisions. But you can't actually place buy-sell orders through the ''Huttonline'' system. You can leave a message saying you'd like to buy or sell a stock, but the broker must confirm the order by phone.
''E.F. Hutton's value is to play an advisory role,'' says Lee R. Greenhouse, Hutton's vice-president for personal computing services. ''We would want to be involved in the process of placing orders, to help a client see where his order fits in with his overall investment plans.'' Hutton has a $25 registration fee and a $17 monthly fee, including two free hours of computer time. Additional time costs 12 cents a minute.
Some observers are concerned that seeing the rapid changes in a portfolio will spur investors into hasty reactions, buying or selling at every beep.
''This really needs a very sophisticated investor to take advantage of it,'' says Norm Nicholson, publisher of Computerized Investing, a Chicago newsletter. ''A lot of people really rely on a broker for advice. Doing it yourself is a long education process.''
''It encourages instant reaction where people won't stop and think,'' agrees Justin Heater, a financial planner in Cambridge, Mass.
Proponents of the systems argue that the investor's most important tool is information, and the ability to read news services like Dow Jones News Retrieval and specialized business wires will permit more informed investment decisions, not hastier ones.