Understanding How Newsgroups

Newsgroups are discussion forums (or electronic bulletin boards) where
individuals post messages for others to read and answer. New newsgroups
appear — and old, unused newsgroups disappear — almost daily.

The advantage of these groups is that the opinions of authors are disparate
and come from around the world. There are between 20,000 and 50,000 publicly
accessible newsgroups. Some of these newsgroups are filled with spam
(junk mail), and others are inactive shells. Newsgroups range from serious to
silly and support almost all religious ideologies, political points of view, and
philosophical beliefs. If you want to know what investors think about a particular
investment, a newsgroup is a good place to look for the answer.
Newsgroup participants aren’t necessarily investment professionals, but
many of them are savvy investors.

Knowing how newsgroups are named can help you determine whether a
certain newsgroup may interest you. Newsgroup names typically have two or
more parts. The first section of a newsgroup’s name is the most general
grouping or topic. Here are some examples of different first names that may
be of interest to online investors:

Section ........................ Description

Alt .......................... Alternative subjects, ranging from the serious

............................... (investing and finance) to the weird (occult and

............................... alternative lifestyles)
Biz ......................... Business subjects, including commercials

Misc ....................... Miscellaneous topics, from items for sale to finance

Newsgroups can have names with two sections. For example the first section
can be alt, and the second section can be invest. The name of the newsgroup
then would be alt.invest. Some newsgroups do not have any subgroups,
but others have 20 or more subgroups under the major topic. One example
of a major topic is alt.invest.real-estate, which branches into other
newsgroups, such as alt.invest.real-estate.methods. That is, each
component of the name represents a different level in the newsgroup. The last
named component is the actual theme of the group. For example, alt.invest.
real-estate is about investing in real estate.

Subscribing to a newsgroup is easy. With most browsers, you simply click the
name of the newsgroup you want to subscribe to. For details, use your Web
browser to check out Beginners Central at Northern Webs (www.northern
webs.com/bc/index.html). Discover how to navigate your browser’s newsreader,
select a newsgroup, and post to newsgroups.

Finding the perfect newsgroup

The Internet provides various sources for finding Usenet newsgroups.

Here are a few examples:

Harley Hahn (www.harley.com/usenet) provides Harley Hahn’s Master
List of Usenet Newsgroups. The master list includes a short description
of each newsgroup, placed in a category and organized in an easy-to-use
search list.
Yahoo! Groups (groups.yahoo.com) offers nearly 3,000 investment
groups and more than 600 online investing mailing lists. In this population,
60 subgroups focus on e*Trade. Registration is free. You can even
start your own Yahoo! group.

Robot Wisdom Newsgroup Finder (www.robotwisdom.com/finder/
index.html) enables you to search by historical period, numbers of
articles, and country or state locations. This site uses clickable maps of
the United States and the world. Responses include the newsgroup
name, address, description, charter, and sometimes Frequently Asked
Questions (FAQs) if available.

Tired of the same old newsgroups? Discover all the Web’s new newgroups by
going to Newsville at www.newsville.com/news/newnews.html.

Finally, some investor news reading

One of the easiest ways to find newsgroups is to go to Google (www.google.
com). Click Groups, then click Browse all of Usenet. At the next Web page
shown in Figure 1-1, to select your topic enter your keyword in the Directory
Search or scroll through the Usenet names. Regardless of which approach
you select, you’ll discover a listing of newsgroups that may be of interest to
you. Each group includes the group’s name, a description of the group, the
group’s category, and other characteristics. These characteristics can
include information about the number of group members, whether the group
is open to the public, restricted, moderated, and so on.

The best feature of this site is that you can post your questions directly to
the newsgroup without a great deal of fuss. You can also search newsgroup
articles for keywords. For example, assume that you’re thinking about investing
in Microsoft. As part of your research, you can see what newsgroup members
had to say about the company, and when they said it.

Another great feature is that you can research the author of the newsgroup
article. Google shows how many articles the author has posted and which
newsgroup that author is posting to. This data can indicate which newsgroups
regularly carry the type of information you’re seeking.

Getting the Message from
Investor Message Boards

With investor message boards, you can read what other online investors are
saying about an investment that may interest you. Overall, these message
boards include many honest, knowledgeable investors, with only a few
unscrupulous fraudsters with questionable intentions. Therefore, you must
determine what is sound advice and what is trash. Make certain that you
complete your own research before acting on any message board information.
The following are a few of the top-rated investor message boards online:

Silicon Investor (www.siliconinvestor.com/stocktalk) has several
levels of membership. Basic membership is free with your registration.
The free, limited level allows you to post between one and two messages
per day. You can’t turn off ads and can’t make use of advanced features
such as Next 10 and Search. Paying subscribers have unlimited posting
privileges, the ability to turn off ads, and access to Next 10, Search, and
Advanced Search features. Subscriptions are $19.95 per month, $29.95
per $29.95, and $49.95 for six months. Annual subscriptions are $89.95,
and a lifetime subscription is $199.95.

The Motley Fool (boards.fool.com) is free with your registration. Here
you find company discussions sorted by name, industry, and market
analysis, as well as an investors’ roundtable for discussing strategies.
Before you post, don’t forget to read the “Fool Community Guidelines” at
www.fool.com/help/?display=community04.
Raging Bull (www.ragingbull.com), now owned by Lycos, has more
than 15,000 active message boards. Participants earn a “power rating”
that indicates how much credibility a member has earned with the community.
Features include lists of the most active message boards and
message boards with the greatest number of posts.

Uncovering Investor Information
from Mailing Lists

Mailing lists are e-mail groups that are started by organizations or individuals
who purchase mailing list programs. Then they advertise to others who may
be interested in joining a topic-specific discussion group. The advertisement
usually provides precise instructions for subscribing to the mailing list.

You subscribe to a particular mailing list by sending an e-mail message to the
list’s moderator. In return, you receive an e-mail message confirming your
enrollment. This message typically includes the address you use for posting
messages to the mailing list, the rules of the discussion group, and instructions
for removing your name — that is, unsubscribing — from the mailing list.

Mailing list participants exchange e-mail about issues in their subject areas. If
someone starts a thread, or topic, that you want to comment on, you post
your comments to the list, using the instructions you received when you
subscribed.

To answer questions or make comments, subscribers send an e-mail message
to the mailing list address (which differs from the mailing list program’s
address), and everyone gets a copy of the message. Unlike newsgroups, most
lists are moderated so that inappropriate messages aren’t sent to the group.

Today more than 300,000 mailing lists exist. You may find a mailing list while
surfing the Net, but they tend to be private. The best source for finding an
investor-related mailing list is Tile.net (www.tile.net). Tile.net has more
than 66,000 public mailing lists and is growing. Don’t despair; the site is
searchable and provides information that describes each mailing list and how

(Sometimes knowing how many subscribers will receive your investment
question is a good idea.)

Don’t lose that information about how to unsubscribe! Mailing list members
receive an average of 30 messages per day. If you just signed up for four mailing
lists, you may have more than a hundred messages tomorrow.
to subscribe (and, more importantly, how to unsubscribe if it doesn’t meet
your requirements). Another good mailing list directory is CataList (www.
lsoft.com/lists/listref.html), which includes more than 66,000 mailing
lists. It’s searchable by site, country, and number of list subscribers.

Setting Up Your Basic Investment

Search engines are commercial enterprises that collect and index Web pagesor Web page titles. You can use them to help you sift through all the Webpages out there so that you can find the information you need.

Some of these enterprises review the sites they collect, and others providesite information unfiltered and unedited.

Some search engines (like Yahoo! atwww.yahoo.com) are hierarchical indexes and use subject listings that aresimilar to the card catalog in a library. Often, you can search hierarchicalindexes by keyword (a word that sums up or describes the item or conceptthat you’re seeking) and by topic.

Knowing how to use a search engine is a basic Internet skill. Currently, morethan 600 different search engines exist on the Net. These Internet tools canbe divided into two categories: metasearch engines and search engines।

Metasearch engines

Metasearch engines enable you to enter a single search term to query manyindividual search engines. This kind of all-in-one shopping is used to matchyour inquiry to the millions of Web pages on the Internet. Metasearch enginesoften have different approaches to presenting your results. Some metasearchengines just query a wide variety of search engines and report your resultswithout you having to go to several search engines.

Other metasearch enginesbypass existing search engines and query multiple online sources for yoursearch results. Here are some examples of metasearch engines:

Dogpile (www.dogpile.com) searches the Web, Usenet newsgroups, FTPsites (sites for downloading software and data via FTP — the file transferprotocol), weather information, stock quotes, business news, and othernews wires. (For more information about Usenet newsgroups, see thesection “Understanding How Newsgroups Can Help You,” later in thischapter.) This site also includes a Web catalog.

Momma (www.momma.com) simultaneously queries a series of searchengines and properly formats the words and syntax for each sourcebeing probed. The search results are then organized into a uniformformat and presented by relevance and source.

Metacrawler (www.metacrawler.com/index.html) works like Dogpilebut doesn’t search Usenet newsgroups and FTP (file transfer protocol)sites.

Search results aren’t annotated.

SurfWax (www.surfwax.com) allows users to put together search sets.For example, an “Investor” SearchSet can include The Wall Street Journal,CNNfn, The New York Times, and so on. You can also use tools for exploringsearch results. For example, SiteSnaps allows you to quickly view pagecontent, and ContextZooming allows you to search highlighted terms.FocusWords offers suggestions about how you can narrow or broadenyour search. Finally, you can use an InfoCubby to save your search resultsfor later retrieval. SurfWax offers three levels of service (free, silver, andgold). With your free registration, you receive the free level of service thatincludes three SearchSets of up to 15 sources each. Silver and Goldsubscribers pay $24 and $60 per year, respectively. Each registered levelhas access to all of SurfWax’s capabilities; the difference is the extent ofpermitted uses. (Firm pricing is available on a custom basis.)

Profusion (www.profusion.com) allows you to search one, some, orall of the listings from AltaVista, About, AOL, Lycos, Raging Search,WiseNut, Metacrawler, MSN, Adobe PDF, LookSmart, Netscape, Teoma,and AllTheWeb. You can fine-tune your search by selecting your searchtype, the number of results per page, the number of results per source,and when you want the search to timeout. You can narrow your searchby looking into vertical search groups, such as Business or Finance.

Vivisimo (www.vivisimo.com) technology was developed by researchersat Carnegie Mellon University. Vivisimo doesn’t index the Web; it simultaneouslysearches several major search engines and directories (suchas Fast, MSN, Yahoo!, AltaVista, Lycos, Open Directory, Excite, andWebCrawler). The Vivisimo technology then groups results into clustersof titled folders that best fit the query.

Popular search engines

Search engines are trustworthy Internet programs that match the words inyour query to words on the Internet. Each search engine is a competitive,commercial enterprise with different databases, search programs, and features.Everyone has a favorite search engine. The search engine that is best isthe one that works the best for you.

Search engines employ spiders or crawlers (robot programs) that constantlyseek new information on the Internet. These robot programs index and categorizetheir findings and then let you probe their lists with keywords. Theengine shows your search results with short descriptions and hyperlinks.Just click the hyperlink to go to the Web page you seek.

Personalized search engines

With more than two billion Web pages, yoursearch for investment information is likely todredge up many articles that are outdated orsimply not relevant.

One way to increase yourtreasure-to-trash ratio is to use a personalizedsearch engine. My Yahoo! (my.yahoo.com)allows users to set up profiles for (among otherthings) specific news topics and a stock portfolio.

The My Excite Web site (my.excite.com)includes much of the same personalization featuresas My Yahoo! With your free registration,you can select page colors, settings, content,and layout (two columns or three?).

Here are a few of the more popular search engines on the Net:

Excite (www.excite.com) enables you to browse many subject categories,such as investing. It uses a combination of concept (a generalidea) and keyword (a specific word in the Web page) searches, so theresults are usually pretty good. If you’re unsatisfied with your findings,click the Excite Metasearch link at the bottom of the page for moreresults.

Google (www.google.com) is currently ranked as the number-onesearch engine. It has the largest amount of the Internet indexed. Googleoffers the Google Toolbar, a quick-and-easy-to-install toolbar that automaticallyappears along with the Internet Explorer toolbar to increaseyour ability to speedily find information on the Net.

MSN (search.msn.com) enables you to set preferences to automaticallycorrect spelling errors, select the number of results per page, and determinewhether search responses should include summaries. Additionally,you can search from any one of MSN’s international Web sites. If you’reunfamiliar with search engines, click Help to get the advice you need.Additionally, MSN has a new beta that is supposed to be a “Googlebeater,” a search engine, index, and crawler. For more information seebeta.search.msn.com/default.aspx?FORM=HPRE.

Yahoo! (www.yahoo.com) is a popular starting point. This directorysearch engine includes a vast array of subject directories, categories,and special services, such as People Search, Weekly Picks, What’s NewThis Week, Yahoo! Loan Center, Finance Yahoo!, and Real Estate Yahoo!

Online Investing Fundamentals

The Internet has more than two billion Web pages and is still growing. Thisinformation overload has sent some timid investors to full-service brokers,where they pay high commission fees for brokerage services and investmentadvice. Smart online investors can avoid information overload by developingtheir own information systems.Now we will show how you can take maximum advantage of the Internet’smany investment tools, links, and resources. The chapter explains theInternet basics of using search engines, finding investor newsgroups,Subscribingto investor mailing lists, accessing online databases, and using Websites tailored to your specific needs to maximize your personal wealth.

Building Your Own OnlineInformation System

Investments provide opportunities to make money in both a bull market (thatis, an up market) and a bear (down) market. No one ever knows for certainwhether the market will go up or down, but investors can develop an informationsystem to watch indicators for potential price changes and investmentopportunities.

This chapter introduces the elements you can use for buildingan online investment information system that meets your specific needs.Investment indicators often signal future market trends. For example, changesin bond prices an

d interest rates often reflect trends that may affect stockprices. That is, if bond yields decline, investors often rush to purchase stocks,causing stock prices to increase.Investors need this information to decide whether they should buy, sell, or hold.Gathering, organizing, and saving this information can be time-consuming.

However, using your own online information system can make the process moreefficient.Successful investing involves five basic steps:

1. Identifying new investments

2. Analyzing investment candidates

3. Purchasing investments

4. Monitoring investments

5. Selling investments — and reaping your rewards

The following sections summarize online sources of the information you needfor each step. Knowing what type of information you need and where to get itonline can help you build your personalized online information system.

Identifying new investments

Before investing, you need to clearly state your financial objectives andknow your risk-tolerance level. This information can help you determineyour required rate of return. By doing this type of homework, you candetermine which categories of financial assets you may want to considerinvesting in.

For example, if you’re selecting investments for your IndividualRetirement Account (IRA), you don’t want to invest in tax-exempt municipalbonds (because being tax-exempt twice isn’t the best way to make use of taxexemptions).

Here are some examples of online sources for identifying investmentopportunities:

Company profiles describe a firm’s organization, products, financialposition, chief competitors, and executive management.

Direct purchase plans (DPPs) show how to purchase stock in a companywithout paying a broker’s commission.

Directories of investor sources provide hard-to-find information that’snecessary for investment decision-making.

Dividend reinvestment plans (DRIPs) describe how to join dividendreinvestment programs to purchase company stock at a discount andwithout a broker.

Initial public offerings (IPOs) are new opportunities for investorprofits.

Investing e-zines (electronic magazines) provide educational articlesand pertinent facts for beginning and experienced investors.

Mailing lists provide opinions and investors’ insights about investmentcandidates.

News reports on the Net can provide information about new investmentopportunities.

Newsgroups are informal, online groups of individuals who share theirideas about a common interest. You can find dozens of investment-relatednewsgroups with topics ranging from specific types of investments toinvestor strategies.

Online databases (free and fee-based repositories of information) providehistorical stock prices, economic forecasts, and more.

Search engines (specialized Internet programs that seek the data youdesire) provide you with links to the Web pages that have the investorinformation you want.

Stock recommendations from professionals enable you to find out whatbrokers and analysts are saying about your investment selections.

Mutual fund and stock screens for selecting specific securities enableyou to sort through thousands of investment candidates in seconds tofind not only the right investment but also the best investment available.

Analyzing investment prospects

The process of analyzing investment prospects includes examining groups ofinvestments or individual securities. For this task, you need information toforecast the timing and amount of future cash flows of investment candidates.That is, the price you pay today is based on the future income of the asset.Figuring out what the asset will be worth in the future requires some homework,analysis, and luck.

Here are a few examples of online sources for thistype of information:

Company profiles and annual reports often forecast the company’sfuture revenues and earnings. (For more information about findingannual reports online.

Databases (free and fee-based online sources) provide news, marketcommentary, historical stock prices, economic forecasts, industry standards,and competitor information. I introduce you to these databases inthe section “Using Free and Fee-Based Online Investor Databases.

Earnings estimates from brokers and analysts give you forecasts of acompany’s future earnings.

Industry or business-sector news can frequently indicate whether anindustry is in a downward cycle.

National economic data can point you toward a particular investmentstrategy. For example, if the country is going into a recession, youmay want to select stocks that provide you with some defense.News databases offer breaking news that can help you judge whetheryour stock purchase is a winner or a loser.

Securities and Exchange Commission (SEC) filings provide you withfinancial statements from publicly traded companies. These companiesare required to file financial statements every 90 days and more often ifbig events are happening within the firm. More than 7,000 publiclytraded firms are now filing online.

Purchasing investments

After you decide which investments you want to purchase, you have to decidehow you want to purchase them. For example, you must decide whether youwant a full-service broker or, for online investing, either a premium discountbroker who offers online trades and advice or a discount broker that onlyexecutes your trades and doesn’t offer any recommendations.

You may participate in an automatic investment plan (AIP). With yourapproval, this type of plan deducts a certain amount from your checkingaccount to purchase mutual funds, savings bonds, or other investments.

Monitoring investments

If you have more than one investment, you likely want to monitor and comparetheir performances to the market and to similar investments.

Here are afew examples of the information and the software you need to accomplishthis objective:

Market-monitoring tools send alerts that you determine. For example, ifyour stock increases by 25 percent, you may want to consider selling it.You can set up an alert that sends you an e-mail message notifying youthat your stock has reached this target.

The Internet provides many portfolio management programs that let youknow when your investments are in the news.

Online portfolio management tools can automatically send you an e-mailmessage at the end of the day to let you know whether your investmentsgained or lost value.

PC-based portfolio management tools are downloadable software programsthat assist you in tracking your investments and record keeping.

Your online broker may track your portfolio for you and keep records ofyour profits and losses.

Selling investments

You need to decide what proportion of your personal wealth you want toinvest in specific assets, how long you want to hold those assets, andwhether now is a good time to sell those assets to harvest your rewards.

To that end, you need information about the following topics:

Asset allocation methodologies: You need to determine what portion ofyour portfolio should be invested in mutual funds, stocks, and bonds.

Capital gains and tax issues: The Smart Money Capital Gains Guide(www.smartmoney.com/tax/capital) can assist you in understandingthe tax implications of investing activities.

Selling strategies: Determining when you should harvest your investmentsrequires using specific order execution strategies, mutual fundredemption plans, and analyses.