World of share trading now just a click away

Much of the information that share brokers rely on to make their recommendation and investments is now available to anyone with access to the internet, writes CHRIS DANIELS.

We've heard it all before. On the internet you can turn the tables on the experts, take control of your destiny and as a consumer discover new-found power from the wealth of comparative information out there.

As with many things on the net, hype and reality are often far apart.

But one area where the net has really shaken up the establishment is the share market. Historical information, obscure facts about companies, tips and advice, all are now available to the smalltime investor sitting at the PC.

The growth of share trading online and access to information via the internet has brought a whole new type of investor into the market and forced old-style brokers to improve their game and embrace new technology.

There are four main sites in New Zealand where you can buy and sell shares. All have similar features - you ring up, leave some money with them in an account and start trading.

Making a trade usually costs between $20 and $30 and the sites allow dealing on the New Zealand Stock Exchange (NZSE) or the Australian (ASX).

Ben Dutton is the manager and founder of Sharechat.co.nz. It previously offered share trading, but now specialises in news, chat and information about shares.

Who deals in shares online? The old and the young, the city folk and the country people, says Mr Dutton. But they are pretty much all men - 87 per cent according to his latest research.

He doesn't know exactly why, but suspects it may be related to the popular belief (backed up by statistics, says Mr Dutton) that men are more likely to be active traders, while women are more content to sit on their portfolios, not feeling a need to constantly meddle with their investments.

One of the most popular parts of Mr Dutton's Sharechat site is the forum section - full of those offering advice about trading shares.

"You've got amateur investors and the odd sharebroker as well. They analyse companies, send it in. I can tell you with certainty that the financial community follows the sharechat forum quite closely," says Mr Dutton. "They definitely see what the other people are saying."

The ease of trading shares on the internet had opened the world up to New Zealand investors, says Mr Dutton.

"It's so much easier now to invest in Australia. Previously New Zealanders were really limited to investing in the NZSE, just 140 listed companies. They can now jump on the internet and bang - they can buy something on the ASX, which has over 1200."

Mr Dutton says he is sure his site has brought new investors into the sharemarket.

"When we launched sharechat, our driving philosophy was to make valuable information as widely available as possible. I would hope that new investors would come to our site, find out information, get information and become long-term investors.

"The sharemarket is all about information, the more you have from different sources, the better placed you are going to be to make good investment decisions."

Mr Dutton says he thinks people were sticking with traditional brokers, but were doing their own online research to supplement it. "They trust brokers, but still want a little bit more; others are much more confident and will not rely on the traditional brokers."

Chief executive of Access Brokerage, Peter Marshall, said anyone wanting to start online investing in the sharemarket should take some professional advice first.

Buying and selling online was becoming increasingly popular, with around 40 per cent of Access' New Zealand business now being done online.

"The whole mix of the investing community trade shares online, we have some very large investors and we have some people who are quite new to the sharemarket as well."

During the recent dot.com sharemarket boom in the United States, stories abounded of "day traders" - people who bought and sold shares online, often with money they didn't have. These traders would buy and sell online, often hundreds of times a day, chasing elusive profits.

Not really the case in New Zealand, said Mr Marshall. Brokers here generally won't let people buy unless they've got enough money in their online account.

So why bother investing online anyway? Because it's cheap, says Mr Marshall. A $10,000 trade through a traditional broker would cost $100. The same trade through Access would cost $29.50.

Online trading was "a lot bigger than a lot of the traditional brokers would like to think it is" says Mr Marshall, with a lot of clients having dual accounts - one with the old-style full-service broker, the other with an online company.

"They'll do some with their broker and some with us. I don't have a problem with that at all - I think that's healthy."

Come November 1, online share traders will be able to show more information, or "depth" on their website than previously allowed by the NZSE.

This means traders can see who is lining up in the market - that is, someone wants to buy 3000 shares at $8.20 while there are a further 10,000 shares waiting to be sold at $8.25.

Websites can show this for the Australian market, but not for New Zealand until November 1.

When this rule changes, one of the last bits of specialist information that the broker retains - to tell a client on the phone - will also be available on websites. This is unlikely to make brokers redundant, but it will make them lift their game.

Where to look

New Zealand brokers offering online investing

* ASB Securities - good-looking site, with an excellent demonstration of how you can buy and sell shares online. Can buy and sell on NZSE and ASX.

* Access Brokerage - business news stories from NZ Herald and the Stuff website. Buy and sell on NZSE and ASX.

* Direct Broking - pretty boring. A dry, financial site without much news and no demonstration. Lively chat-room about shares, albeit with a sexist bent: "Is it any coincidence that our country and TEL are both led by women - both heading in the same direction?"

* DF Mainland - demonstration of online trading not available when checked. Offers an advisory service, along with online trading.

Resources, advice and old fashioned gossip about the markets

* Share Chat - check out the "Education" section, for a good introduction to the whole business.

* Stockness Monster - run by Solution 6, this site is more technical, with charts, numbers and graphs galore.

* Stockwatch - a Wilson & Horton website with information provided by Henley Investor offering good news, numbers and a "dummy portfolio" to play with.

* Henley Investor - from the people who offer share trading information software packages, Henley allows up to six dummy portfolios. Lots of good charts and data.

* NZSE - Possibly one of the most boring websites in New Zealand, but worth a look. After all, they make all the rules.

International sites

* E Trade

* Worldly Investor

* Trading Room

* Fool