Putting Your Money Where Your Mouse Is

What scares this class of online investing neophytes--the twentysomething man in shorts and a T-shirt, a white-haired man with bifocals and 13 others--is the way the numbers flash, anxiously, alluringly across their computer screens. Watch Amazon.com’s stock quotes for a few seconds: 80 7/8, 80 11/16, 80 1/2. What if you blink and mean to buy at 80, and the price jumps to 81? What if you mean to buy 100 shares and type 1,000?

Todd Haile, a 44-year-old accountant, was one of the greenhorns who showed up last week for the free one-hour class on online investing at Web Street, an online brokerage that recently opened its first investors center in Beverly Hills. Haile was nervous about using his computer to invest. “And now,” he said, “it’s not scary.”

Haile doesn’t plan to be one of those high-flying, high-volume day traders who have been in the news so much lately--the kind who jump in and out of stocks all day trying for quick profits and more often incurring quick losses. But he wants to use the Internet’s timeliness and resources to make his own solid investments.

As Americans increasingly take control of their financial futures, they have turned in ever-growing numbers to the Internet, where the proliferation of online brokerages, such as E-Trade and Charles Schwab, have made investing as easy as logging on to a Web site. A report by regulators last summer estimated that about 200,000 investors make two or three trades a day through online brokers, but they aren’t considered “day traders” since that group consists of only about 5,000 people who trade through specialized day-trading brokerages and make, on average, 35 trades a day.

Please don’t call Web Street a day trading firm, said Oliver Moussa, its manager of West Coast operations.

“That’s all about buying and selling in one day,” Moussa said. “We don’t [encourage] any of that. We empower people to do their own investing.”

The practice made headlines in July after a distraught investor killed nine people at two Atlanta day trading offices before committing suicide. The vast majority of day traders lose money, say regulators, and the industry is fraught with widespread abuses. (Day trading firms countered that the study exaggerated and made conclusions based on insufficient evidence.)

Here at Web Street, online investors make trades at a sleek horseshoe-shaped counter via computer in a chrome-and-black room, where a wall of 18 TV screens airs financial news and a Wall Street ticker relays the market’s mood. Brokers will be available to help with transactions but won’t give investment advice. Clients can also log on from any computer to Web Street’s “trading pit,” which monitors stocks, options and mutual funds and, for an extra fee, provides live, updated quotes. Generally, the commission charge is $14.95 per trade, typical of other sites.

Web Street’s clients range from an 18-year-old with $100 in his account, looking to make his first trade, to an 80-year-old who wants to buy and sell Wal-Mart stock twice a year. No minimum balance or transaction quota is required to keep an account.

In the class, Moussa points out safeguards to protect each client. For instance, the computer won’t accept trades that would bust the client’s account, and the client must verify each transaction twice before it goes through.

Singer Janet Jeffrey, 29, likes the idea of having control over her investments. She wants to start small, with a few mid-risk stocks, and then reinvest her earnings.

“No broker will stop me,” she said, “but a broker will be there in case I’m scared.”

For information on Web Street, call (310) 278-7338 or log on to https://www.webstreetsecurities.com. E-Trade’s Web site is at https://www.etrade.com; Charles Schwab’s is at https://www.charleschwab.com.