Cramer's Online Brokerage Speech, Part 4

The ideal 21st-century brokerage would have no brokers, just a Web site, the trader says.
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Editor's note: On Monday in Reston, Va., Jim Cramer spoke at the Friedman Billings Ramsey 4th Annual Technology Investor Conference. This is the final installment of the four-part series. Get up to speed with part one, part two and part three.

In fact, if you want to know what the world will look like when those who "get" the Net take over, I will tell you right now. A brokerage department will work side by side with, or be owned by, a news organization, or be partnered with one. Instead of being staffed by multimillion-dollar analyst shills, these "research" departments will be newsrooms of financial journalists who don't own stocks coupled with buy-side money managers who do own stocks and disclose their positions.

In fact, if I had to develop the ideal 21st-century brokerage by people who get the Net, here is what it would look like: I would have no brokers, just a Web site. On the Web site would be the latest in breaking proprietary news, a ticker and a team of journalists keeping you up on developments that can make you money.

The only question is who will do it first? Who will be the first? Who will merge and create that ultimate value proposition to the consumer? I know in our discussions at

, we spend a tremendous amount of time trying to figure out who should be at the top of the value pyramid directing the traffic to the news and then to the one-stop shopping. Who can harness the power of the good story and collect the tolls from people who want to own it? Should it be



? Should it be

America Online


? Should it be

? I think yes, it should, but we just haven't been able to figure out yet how to make it work. But it is only a matter of time.

I do know this. At the top of the pyramid will


be any of the old-line guys. Not with that infrastructure. Not with highly paid studies by consultant firms that also don't get the Net, but charge millions upon millions for their dubious advice. Not with people who don't get the Web in its larger, more revolutionary context, as something that has revealed the traditional model to be nothing more than a high-paid sham.

The old-liners can't stomach the editorial's independence. It scares them. But it is that "scary" quality of editorial that so endears

to its readers and makes the public believe that, in the end, the powers behind the Net are on the side of the public, not the corporate finance department, not the underwriters and not the old-boy network.

So what happens to the people from the old-line brokerages who read this and say "I don't get it"? Here is the saddest, most ironic part. Nothing. These firms are like giant dinosaurs. They think they can never be brought down. Heck, they rule the investment world. They are still laughing, at least in public, at the nascent online world. Their kids and their grandchildren surf the Net for fun and education even as they read the paper and watch TV.

Ah, but I have seen


. I know those dinosaurs were powerful nasty sons of bitches, but in the end, they went down. In a blink of an historical eye. Helpless to do anything and incapable of adapting. One day in the not-too-distant future, we will visit Jurassic Park in the canyons of Wall Street and marvel that these onetime masters were paid millions of dollars to do what people will ultimately do for much, much less money. There will be some dinosaurs cavorting on display, preserved by those too rich and too time-consumed to do it themselves, kept alive by an older generation that is disappearing before their very eyes.

It will be very entertaining. It just won't be profitable.

Thank you.

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund was long Yahoo! and AOL. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at