Thursday, October 26, 2006

SDForum's New Media Panel Discussion

I took part in a panel discussion entitled “Wave of the Future” at the SDForum’s Business of New Media event, which took place in Santa Clara on October 25th.  Others on the panel with me were Dylan Tweney of PC Magazine, Anil Dash of Six Apart, and Ramneek Bhasin of Mobio Networks. Our panel was ably moderated by Steve Bengston of PriceWaterhouseCooper. 

Dylan provides an excellent summary of our hour behind the mikes in his blog entry on The Tweney Review.  As he says, “It was a lively discussion that focused primarily on mobile media, and its potential to replace and/or supplement PC-based media such as the web.” Thanks, Dylan!

I was able to stick a few words in edgewise about financial technology, but that didn’t seem to be what the audience was expecting.  I attempted to provide the occasional comic relief sound bite once I realized my expertise was somewhat orthogonal to the rest of the panel. 

Posted by twcarey on 10/26 at 02:49 PM
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Saturday, October 21, 2006

Brain Weds Brawn

INVESTMENT EDUCATOR INVESTOOLS LAST MONTH acquired online brokerage firm thinkorswim in a $340 million cash-and-stock deal with intriguing possibilities.

First, it isn’t just another transaction in which an online broker exits into the arms of a bigger rival, forcing clients to adapt to an unfamiliar platform. In fact, thinkorswim may emerge larger, post-purchase. Second, the deal combines two complementary attributes—market knowledge and online-trading execution muscle—that could spur new growth at the combined entity.

INVESTools ( considers an educated investor is a more effective—and profitable—investor. The firm (ticker: IEDU) offers courses, online and live, aimed at helping investors understand how to balance risk and opportunity, and fatten their portfolios.

In fact, students brought the two companies together, according to INVESTools’ CEO, Lee Barba. A number of one-time classmates and other colleagues get together periodically to talk about stocks and strategies. One such Washington, D.C., group—primarily active options traders—had organized a conference call with thinkorswim founder Tom Sosnoff, and invited Barba to listen in.

Sosnoff stopped the session at one point and asked, “Who are you guys? You seem to know a lot about options trading.” They identified themselves as INVESTools grads. The group members suggested that Barba take a look at thinkorswim’s technology and consider working it into INVESTools teaching toolkit.

“We needed an account-acquisition engine because we hate marketing, and I think we made the best trade possible,” Sosnoff told Barron’s in an e-mail. In a letter to current thinkorswim customers, he added, “With our new partner, we won’t have to worry about morphing into a marketing company like most of our online competitors.”

Sosnoff also says this deal will double the size of his development team and that he’ll add new investment classes to thinkorswim’s existing curriculum in the coming year. Previously privately held thinkorswim ( also launched a Web-based paper-trading platform, which allows users to simulate trades and view the results.

Last month, thinkorswim rolled out Shadow Trader, which delivers streaming market commentary, including live analysis of sector trends and individual stock performance. Designed to round out thinkorswim’s option-oriented education programs, this new content, available at no additional charge, explains technical indicators and market internals, such as volatility divergences and contrarian- sentiment indicators. Shadow Trader is broadcast live via the thinkorswim software over a dedicated audio network.

Richard Fetyko, an analyst at brokerage Merriman Curhan Ford, says the purchase should allow INVESTools to hold on to more client revenue. Previously, the firm generated small fees from referrals to online brokers. But it spent heavily to acquire customers before handing them off to the brokers. “INVESTools was missing out on the recurring revenue streams that online brokers have,” he adds.

Fetyko says that INVESTools talked to several online brokerage firms. “They were most impressed with thinkorswim, in part because of the corporate culture being very aggressive on the customer side, and the high-touch customer service,” says the analyst.

Prior to this linkup, INVESTools had been affiliated with optionsXpress ( Both thinkorswim and optionsXpress ranked very high in Barron’s annual review of online brokers. Earlier this year, optionsXpress was the winner for Web-based brokers while thinkorswim was at the top for software-based brokers. Thinkorswim ended up in second place for Web-based brokers as well.

Fetyko says that INVESTools management seeks “best in class” affiliations. For example, in January 2005, it bought (, an excellent online charting and analysis platform.

Barba says that thinkorswim’s philosophy is consistent with INVESTools’ regarding the importance of education. “I’m very passionate about what we’ve built and saw that same passion in Tom,” Barba states.

OptionsXpress will now lose clients referred to it from INVESTools. These folks usually qualified for the firm’s Active Trader commission schedule ($9.95 per transaction, rather than $14.95). OptionsXpress president David Kalt says the impact will be minor. “We’ve seen fewer and fewer accounts directly from INVESTools over the last six months,” says Kalt. “We have other channel partners, and we have our own educational areas.”

Kalt agrees that education is key to successful trading. “I clearly see that there’s strong demand for increased education among investors, especially about options,” he says. As a result, optionsXpress is offering more seminars and “webinars” than in the past, teaching the mechanics of deploying options strategies as a long-term investor. “The growth of online investing and online options investing will be directly correlated to educating the investor,” says Kalt.

TRADESTATION ( clients who trade 5,000 or more shares in a month will have the firm’s $99.95 platform fee waived for the following month. The offer begins Nov. 1. The previous minimum was 25,000 shares. TradeStation’s analytical platform, with its charting and trade-automation capabilities, is aimed at frequent traders.

Published in Barron’s, October 16, 2006.

Posted by twcarey on 10/21 at 08:45 AM
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Saturday, October 07, 2006

Juicier Apple Is Tempting

DURING A PRESENTATION I GAVE at a personal-finance conference back in 1992, I asked the Mac owners in the audience to identify themselves. Just two from a group of about 300 people raised their hands. “I like my Mac,” explained one of them, “but I have a PC for my serious work.”

That seems an apt summation of the two computing systems’ long battle: in one corner, the Mac, expensive, fully outfitted with software and suited for graphics-heavy games; in the other, the PC, cheaper and stripped down (with loads of options to build-your-own), but able to handle most jobs with ease.

But the nature of this bout is changing for everyone, including electronic investors. The newest Macs offer PC-like pricing, especially since they come as an integrated set that doesn’t need pricey add-ons. In turn, PC users who have been waiting to upgrade to Microsoft’s delayed next-generation operating system, Vista, can’t help but look on a little enviously.

Through its new Intel-based Macs, Apple Computer offers a tempting alternative. Its third-quarter report to shareholders boasted huge sales increases, and says that the company—already enjoying iPod’s huge success with consumers—now holds 12% of the laptop market, up from 6% in January. Desktop sales haven’t experienced the same leap, but analysts expect that will change as the Intel chips are installed in future systems. (Apple didn’t respond to our queries for this story.)

When you buy a Mac with the Intel Core Duo processor, you’re able to run software that is written for both Mac OS X and Windows XP. Microsoft has stopped producing Internet Explorer for the Mac operating system, but it will still run under Windows XP on a dual-processor Mac.

Prices for a MacBook with the Intel Core Duo processor now rival those of a Windows-compatible notebook. We found a MacBook with a 2GHz processor on that included a 60-gigabyte hard drive and 512MB of RAM for $1,199.99 (including a $100 manufacturer’s rebate), the same price as a Sony VAIO that had a 1.86GHz processor. (The Sony had a 100-gigabyte hard drive and 512MB of RAM.)

Last month, we asked Barron’s readers to tell us about their experiences in moving from the PC to the Mac. We didn’t get a huge response, but the comments we did receive were interesting—and positive.

One writer gushed, “The iMac is the best computer I have ever owned, now that it has both operating systems, Windows and OS X. Last week, I bought a new MacBook laptop and installed Windows on it, and E*Trade works perfect on it also.”

Another noted that Interactive Brokers’ Java-based trading platform runs “flawlessly” on his Mac. Java applications are platform-independent, so they can run on PCs or Macs. He goes on to say, “In fact, by transferring a folder, I can switch my settings and portfolio, from Windows to Mac machines, and vice-versa. I’m very pleased with this flexibility, because I don’t have to take my computer when I travel. I just copy the appropriate folder onto a flash drive and transfer it to any computer anywhere.”

A reader in Florida reports a more mixed experience using a previous Mac version with active trading platforms: “Both E*Trade Pro and TD Ameritrade Apex platforms run on Macs, as these are Java-based applications, but E*Trade’s futures platform does not.” (E*Trade confirms that this is the case.) There isn’t yet a mobile Mac-compatible platform, explains one of our respondents, so some of the applications discussed in “Latest Road Rage: Trading” (The Electronic Investor, Aug. 14) that run Windows cannot run on Macs.

Java-based direct-access trading software, such as thinkorswim’s or Interactive Brokers’, are theoretically platform-independent and thus should run on Windows, Mac and Linux operating systems. Programs that are defined as running on Windows, such as Fidelity’s Active Trader Pro, should also run on the Intel-based Macs.

Still, the Mac falls short on technical-analysis software written for its operating system. Yes, the new Macs can run software written for Windows, but few publishers have tested these programs on the Apple systems. We found a technical-analysis program called ProTA for Mac OS X, by BeeSoft (, that has two versions: ProTA and ProTA Gold. ProTA includes classic charting, technical analysis, portfolio management and quote maintenance, for $59. The gold version ($199), can create custom indicators, trade modeling, optimization of parameters, and scan for trading opportunities. ProTA’s features are comparable to those of Fidelity’s Wealth-Lab Pro (, which is free to Fidelity customers whose trading frequency and portfolio size qualify them.

The fate of products like ProTA for Mac OS X may depend on how big a bite Apple can take out of the desktop marketplace. And Apple’s success relies in part on how many publishers like BeeSoft take the risk of supporting its cause.

Published in Barron’s, October 2, 2006

Posted by twcarey on 10/07 at 04:51 PM
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