More investors using PCs for stock trading at home

Donald Beckett has just moved to a larger Florid condominium to accommodate his hobbies: ballroom dancing and in-home computer stock trading.

His electronic equipment, which includes two computers, printers and a television for monitoring business news shows, is all mounted on wheeled desks so it can be pushed aside during dance lessons, then brought out when trading resumes.


Mr. Beckett, a 68-year-old retired signal inspector for Burlington Railroad who has studied the market for more than 40 years, is among investors who use computers to trade stocks, mutual funds, even options, without calling a broker.

For many investors like Mr. Beckett, being in the market these days is a hands-on affair. Mr. Beckett uses software from Fidelity Investments ($89.95) to make his trades, after establishing a trading account with the brokerage firm.


Another discount brokerage, Charles Schwab & Co., offers a similar software package ($69) for customers to use with its accounts.

Both packages allow direct linkups to the mainframe computers of the brokerage houses, which enable quick trades during market hours. And both offer on-line traders a 10 percent discount on commissions.

"I never did like depending on a broker," Mr. Beckett said.

He makes perhaps three to four trades a week.

Other aficionados of on-line trading are more active, said Janice Dolnick, marketing manager for technical services at Fidelity.

"We have a significant number of customers who are using it everyday. They tend to place a greater and greater number of these trades without a representative. It's private, easy, fast, and you get a 10 percent discount," she said.

George Neumann, a former IBM manager in Bloomington, Minn., has become so active with his in-home trading that he has made it a second career.

Earlier this year, Mr. Neumann, 52, accepted an early-retirement offer from IBM, and now works from his home as a licensed manager of portfolios for 30 paying clients. He also maintains his own account and those of his family for free.


Mr. Neumann, who has always been interested in the stock market, became more active with his own account after the October 1987 crash.

"After October 1987, I could see some real bargains out there," he said. His initial trades proved successful, he said, after he followed a strategy that relied heavily on trading in options for the stocks he bought. Family members soon asked him to manage accounts for them, and the rest, with fellow IBM retirees seeking his advice, followed naturally.

"If it wasn't for this small-business opportunity, I don't think I could have afforded to retire," Mr. Neumann said.

His new business would have been impossible without the availability of on-line trading, he added.

"I can't imagine sitting on the phone with a broker to order different stocks for 30 different clients," he said. Plus, the 10 percent discount has saved him and his clients $5,000 to $6,000 in commissions this year.

Mr. Neumann relies most on Schwab's Equalizer software package, but uses Prodigy Services' data base as a backup to obtain closing stock quotes easily and cheaply.


The range of fees and what they buy from on-line trading products vary, although competition in this area appears to be drawing vendors closer in price and service.

The 10 percent commission discount offered to Schwab's on-line traders means that a purchase of 100 shares of stock at $100 apiece costs $49.50 in commissions, rather than the $55 in commissions required to call a Schwab broker to place the order. At Fidelity, the same trade for an on-line user would cost $48.60, vs. $54 paid to a broker.

The two software packages from Schwab and Fidelity offer 100 free real-time quotes, meaning a user can receive, for free, current market prices if he or she logs on in the middle of the trading day.

Schwab allows bond trading, and offers additional trading techniques, such as selling short, issuing stop-limit or all-or-none orders, which Fidelity's package does not. Fidelity imposes a $25,000 buying limit per day for most traders, while Schwab does not.

Both packages offer portfolio-management services to help users keep track of their accounts, but only Fidelity's lets a user work up a Schedule D tax report.

The Schwab and Fidelity software packages are just that -- packages for use on personal computers that can be acquired for a one-time price.


Similar trading services are available from some of the consumer-oriented on-line computer companies such as CompuServe and Prodigy, which have arrangements with brokerage firms to set up accounts for desk-jockey traders.

Prodigy users, for instance, can trade stocks, options, mutual funds and other financial products through its PC Financial Network for the price of the service's regular fee (now $14.95 a month), plus a commission on trades. A trade of 100 shares at $100 apiece would cost an occasional user $80 in commission, while a frequent user who paid more than $1,000 in commissions in the previous 12 months would pay $60 for the same trade, according to a Prodigy spokesman.

CompuServe's price structure varies slightly, depending on which brokerage firm customers use. But generally, customers pay a one-time fee of $25, plus CompuServe's usual hourly rate of $12.80, plus a surcharge to use the brokerage services.

"Will this put brokers out of business?" asks Fidelity's Mr. Dolnick. "No. There are a lot of people who don't have a PC and never want a PC. The hope is this will enable our existing representatives to serve our customers better."