On-line information's powerful role in investing decisions

This paper examines the importance of information to the on-line investor and some consequences of getting information from on-line sources. A brief history of online investing shows how trading behavior of individual investors has evolved with new internet technology. Many individual investors use the Internet to gain access to information from traditional media sources and non-traditional sources such as message boards. Some investors will act on news found on-line without examining the source behind the story. Studies show how on-line information, good or bad, can move the stock price. The powerful role of information in valuing stock prices creates an environment; where criminals can profit from posting false information. Regulation is necessary to prevent uneducated investors from losing money. However, constitutional limits prevent regulatory agencies from taking action. Instead, the Securities and Exchange Commission and the National Association of Securities Dealers Regulation are educating investors to make the Internet self-regulating. A small case study on how students use the Internet for information and investing will be cited throughout.