Survey on the Impact of the World Wide Web on Individual Investors and Electronic Stock Trading
by Stan Lim
Updated Dec. 31, 1998

Survey Objectives

Follow-up to the original survey done in August 1996.
Determine any demographic patterns in the usage of Internet technology by individual investors.
Identify any trends and preferences in the types of services and tools used by Internet-savvy investors.
Discover the benefits sought and main reasons why investors use the Internet.
Evaluate the general sentiments about the relative popularity and future of Internet based stock trading and digital exchanges.
Identify some of the concerns about using the Internet.

Highlights of 1st survey

Survey time: 1 week in August 1996
Audience: Newsgroups and e-mail lists
Total responses: 74
Detailed report can be found at http://www.employees.org/~slim/research.960816.html

Findings from 1st survey

The main reason people use the World Wide Web is for convenience. The biggest concern users have is security.
The majority of Internet users have been trading for a long time. They are experienced traders, not novices. Most investors use the Internet for information and research, but still rely on brokers to execute their trades.
Most users only use services that are free of charge. Women appear to be more willing to pay for Internet services compared to men.
Many people expressed interest in electronic trading, but few actually do because of perceived security problems.
Digital stock exchanges may be ahead of its time.

Scope of 2nd Survey

Survey time: January 1, 1997 to March 15, 1997 (10 weeks)
Audience: Newsgroups, e-mail & web-postings
Total queries: 1200+
Total responses: 174

Scope of 3rd Survey (1997)

Survey time: March 16, 1997 to Dec 24, 1997 (40 weeks)
Audience: Web-postings and links predominantly
Total queries: 4000+
Total responses: 166

Scope of 4th Survey (1998)

Survey time: Dec 25, 1997 to Dec 31, 1998 (53 weeks)
Audience: Web-postings and links predominantly
Total queries: 6500+
Total responses: 121

Survey Data - Demographics

	Aug-96	Mar-97	Dec-97	Dec-98
Sex
Male	87%	83%	86%	91%
Female	14%	17%	15%	9%

Age
Under 21	1%	7%	9%	19%
21 - 30	24%	29%	28%	34%
31 - 45	60%	41%	33%	26%
46 - 55	12%	17%	20%	14%
56 and up	3%	6%	11%	7%

Years Trading
0 - 1	12%	21%	31%	40%
1 - 3	19%	20%	13%	12%
3 - 5	22%	11%	14%	15%
5 - 10	14%	19%	13%	14%
More than 10	34%	29%	30%	19%

Survey Data - Technology Use

	Aug-96	Mar-97	Dec-97	Dec-98
Phone Trades
Yes	32%	37%	33%	26%
No	68%	63%	67%	74%

Modem Trades
Yes	23%	22%	23%	24%
No	77%	78%	77%	76%

WWW Investment Related Applications
Yes	88%	85%	78%	74%
No	12%	15%	22%	26%

Survey Data - Applications

		Aug-96	Mar-97	Dec-97	Dec-98
Real Time Quotes	Never	54%	49%	43%	53%
	Sometimes	17%	22%	29%	18%
	Often	29%	29%	28%	29%
Delayed Quotes	Never	14%	15%	26%	34%
	Sometimes	14%	19%	20%	21%
	Often	72%	66%	54%	45%
Portfolio Tracking	Never	37%	25%	34%	42%
	Sometimes	23%	21%	18%	17%
	Often	40%	54%	49%	41%
Graphs & Charts	Never	11%	24%	28%	35%
	Sometimes	37%	20%	23%	26%
	Often	52%	56%	49%	39%
Research	Never	12%	13%	16%	31%
	Sometimes	37%	32%	28%	19%
	Often	51%	55%	56%	50%
Forums/Discussions	Never	32%	59%	69%	70%
	Sometimes	31%	26%	22%	17%
	Often	37%	16%	9%	13%
On-line trades	Never	75%	61%	63%	62%
	Sometimes	11%	32%	17%	6%
	Often	14%	13%	21%	32%
News	Never	N/A	55%	61%	70%
	Sometimes	N/A	32%	26%	16%
	Often	N/A	13%	13%	14%

Survey Data - Reasons for Use

	Aug-96	Mar-97	Dec-97	Dec-98
Why use the WWW?
Timely data	82%	77%	72%	63%
Access News	82%	72%	78%	66%
Discussions	34%	17%	12%	15%
Convenient	86%	77%	71%	62%
Faster Execution	25%	28%	33%	32%
Fun	55%	49%	55%	44%
Free Services	N/A	67%	64%	53%

Continue using WWW?
Yes	95%	94%	91%	94%
No	0%	2%	0%	0%
Don't Know	5%	4%	10%	6%

Made more money using WWW?
Yes	42%	49%	47%	39%
No	19%	17%	17%	23%
Don't Know	40%	34%	37%	38%

Survey Data - Preferences

	Aug-96	Mar-97	Dec-97	Dec-98
Preferred Trading Method
Full Service	25%	16%	11%	17%
Discount Broker	33%	25%	29%	22%
Phone (Automated)	9%	7%	6%	3%
Modem to Broker	12%	8%	12%	9%
WWW	22%	39%	41%	45%
Other	N/A	5%	2%	4%

Preferred Source of Information
Trad. Broker	15%	9%	14%	10%
Others	14%	15%	15%	20%
WWW	71%	76%	71%	70%

Survey Data - Crystal Ball

		Aug-96	Mar-97	Dec-97	Dec-98

Interested in on-line trading	Yes	80%	85%	83%	85%
on Digital Stock Exchanges	No	4%	4%	5%	5%
	Don't Know	16%	11%	12%	10%

Will the electronic trading	Yes	60%	69%	66%	82%
become more popular	No	23%	15%	14%	6%
than traditional brokers?	Don't Know	18%	16%	20%	12%

Will digital stock exchanges	Yes	46%	50%	48%	52%
become more popular than	No	27%	19%	17%	15%
traditional stock markets?	Don't Know	27%	31%	35%	33%

Findings from 2nd survey

There are more newbies to Electronic trading
Real-time Quotes are replacing Delayed Quotes in popularity
Users perceive that they are making more money using the WWW
People are moving away from time-intensive discussion group such as e-mail, forums and newsgroups
Convenience and time are still the top reasons for use, but the biggest increase is in the need for speed to the feed
Full-service brokers need to protect their positions by offering different services to differentiate themselves.

Findings from 3rd (1997) survey

The number of users under 30 or above 45 appear to be growing faster than users in the 31 - 45 age group.
More new traders (less than 1 year) are using the Internet compared to more experienced investors
The use of telephone or modem trading programs has been consistent in the last 16 months.
The use of Real-time Quotes appears to have increased slightly, while the use of Delayed Quotes has declined.
The three major reasons why investors use the Internet are still the same: Timeliness of Data, Access to News and Convenience.
About half the survey participants believe that they are making more money using the WWW.
People are continuing to move away from time-intensive applications such as e-mail, forums and newsgroups.

Findings from 4th (1998) survey

The number of survey participants aged 30 and under is still the fastest growing group. Users under the age of 21 appear to be growing the fastest.
The Internet is attracting more new traders (less than 1 year experience).
The use of telephone or modem trading programs has been consistent in the last 2 years. For some investors, the use of WWW Investment tools is on the decline.
Although the availability of free Real-time Quotes has increased, more than half the users surveyed do not use this function.
The three major reasons why investors use the Internet remain the same: Timeliness of Data, Access to News and Convenience.
Two out of five survey participants believe that they are making more money using the WWW.
Nearly half the investors surveyed favor Internet-based brokers over all other types of brokers. 4 out of five of the believe that electronic trading will become more popular than traditional methods.

Do you have a comment about the Internet and Stock Trading to share with others? Add it on the Writing on the Wall, added on October 22, 1997.

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Survey on the Impact of the World Wide Web on Individual Investors and Electronic Stock Trading by Stan Lim Updated Dec. 31, 1998

Survey Objectives

Highlights of 1st survey

Findings from 1st survey

Scope of 2nd Survey

Scope of 3rd Survey (1997)

Scope of 4th Survey (1998)

Survey Data - Demographics

Survey Data - Technology Use

Survey Data - Applications

Survey Data - Reasons for Use

Survey Data - Preferences

Survey Data - Crystal Ball

Findings from 2nd survey

Findings from 3rd (1997) survey

Findings from 4th (1998) survey

Created: 97/04/27 Updated: 99/01/03

Survey on the Impact of the World Wide Web on Individual Investors and Electronic Stock Trading
by Stan Lim
Updated Dec. 31, 1998

Created: 97/04/27
Updated: 99/01/03