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278 SECURITIESTRADING ON THEINTERNETMoney.CNN.com, CBS runs CBS.Marketwatch.com, and
Intuit offers http://www.Quicken.com.
Several financial Web sites were founded with com-
munity forums at their hearts. The role of these sites is to
form a convenient virtual meeting place where investors
can share information and opinions with others about
the economy, specific industries, and particular compa-
nies. Message boards, chat rooms, and educational con-
tent constitute the backbone of these Web sites. As media
vehicles, portals and message board forums have gener-
ally partnered with online brokerages and banks in order
to offer a wide range of transactional services while re-
maining focused on their core competencies. Two of the
most consistently popular investment communities have
been The Motley Fool (www.MotleyFool.com) and Raging
Bull (RagingBull.Lycos.com).
Raging Bull was one of those Internet start-ups that ex-
perienced skyrocketing growth during the dot-com boom.
Like Michael Dell before him, Bill Martin, founding part-
ner of Raging Bull, turned a personal interest into a
multimillion-dollar company while still in college. Hav-
ing been fascinated by the stock market since age 9 and
with the Internet since high school, Mr. Martin discovered
early financial message board forums as a summer intern
at Goldman Sachs in 1995–1996.As an investor I spent a ton of time that sum-
mer in the message boards. I thought, “Wow!”
because I remember in high school driving
25 minutes to go to my public library to look
up stocks that I owned in ValueLine....And
of course ValueLine only updates every cou-
ple months,...but I can check every day [on
the Internet] and it’s even cooler for these littlecompanies you’re following. A guy reads in his
local paper an article and he puts it online—
a little news here and there and you [put to-
gether] these tidbits and [and produce a phenom-
enal] amount of information. That just shows you
how dramatically things have changed. It truly
unleashed the amount of data and information
available.
I started talking to my best friend from high
school—“Let’s start a business together.” So we
started messing around at the end of ‘97—
launched a small site. In early ‘98 we were kinda
playing around, and then along with another
guy decided that the following summer we were
going to go full time with this. We took
$20,000 between the three of us...and we
launched it in June of ‘98 (Martin, 2002 [personal
interview]).Mr. Martin never went back to college. Within a year,
Raging Bull was one of the five largest finance Web sites.
Its revenue rose to almost $10 million (annualized) in
18 months. In January, 2000, it attracted 3 million unique
visitors and 300 million page views. CMGI@Ventures and
CNET invested $22 million. The company’s management
eventually decided not to go public as a stand-alone firm:
“Raging Bull’s community was nifty and neat, but it would
be better as part of something bigger that had a whole
suite of services.” Instead, they sold the firm to Terra
Lycos in 2000 for almost $200 million, and it become the
centerpiece of Lycos’ financial service offerings.
An article by Tumarkin and Whitelaw (2001) stud-
ied the applicability of message board postings as pre-
dictors of stock price and volatility. Investigating theTable 2Comparison of Online Brokerage FirmsOnline Revenue, Commission on Limit/ Streaming Real-Time
November 2001 Market Equity Order Data
Charles Schwab $2,461,500,000 $29.95+$3 for order handling Quotes, Level II, News, Charts,
& Company Time & Sales
Fidelity $30/$25+ 2 ¢share over 1000 Quotes, Level II
E∗Trade Group $2,171,765,000 $19.95 (limit and Nasdaq Quotes, Level II, Watch Lists,
orders)/$14.95 (listed market Charts
orders)+$3 for order handling
Ameritrade∗ $487,300,000 $13.00/$8.00 prior to 10/19/02, None
$10.95 for both thereafter
Datek∗ $9.99 Quotes, Level II, Portfolios, Charts,
Last Sale, Index Quotes
FolioFN.com $4.00 each for trades executed
two times daily, $14.95 each
for real-time trades without
specified price
Sharebuilder.com $4.00 each for trades executed
at start of trading on Tuesdays,
$15.95 each for real-time trades
Buyandhold.com $6.99 each for first 2 trades a
month, $9.98 thereafter∗Ameritrade and Datek are seeking to merge, at which time Ameritrade’s fee schedule will be used.