In February 2000, at the peak of the bubble in dot-com stocks, I wrote a story in a special edition of Forbes magazine that had a provocative blurb on the cover posing the question: "Will the Web Produce the Next Warren Buffett?"
The article chronicled several amateur investors who were riding high during that raging bull market. One of them was a 47-year-old housewife who lived on a cattle ranch in Nebraska. After seeing her family nest egg languish in the high fee mutual funds that her broker had sold her, she went online to a site called ClearStation.com and taught herself about price-earnings multiples and moving averages. Another success story was a schoolteacher from Wisconsin, and yet another was a Vietnamese immigrant who worked for the phone company by day but trolled sites like Yahoo and Briefing.com for stock ideas at night.
A little more than a month later, the dot-com bubble burst and most of the tech stocks these amateurs had big profits in came crashing down. The party was over for these bull market heroes.
Or was it? There were five million online investors when I wrote that article. Today there are an estimated 50 million in the United States alone. I now think of the amateur online investors I profiled in February 2000 as merely an early wave in the gathering troops of self-directed investors. Today's online investors are equipped with great technology and a seemingly endless armament of information, tools, and ...