Here's a frightening concept for traditional brokerages: The whole online world despises Wall Street research (outside of
Abby Joseph Cohen
). The same instinct that makes online traders want to do it themselves also makes them incredibly distrustful of big-time research.
Much of the traditional press believes that the online guys are just a bunch of gullible bozos that will grasp at anything. That's wrong. Online traders are actually so suspicious and skeptical that they would rather believe a total yahoo who is obviously long something than a highly paid research analyst who has the agenda of his firm behind him, even if he is not long.
Online traders listen to
. Online traders read the boards. They think, rightly or wrongly, that traditional Wall Street analysts are completely on the take. They arrive at this empirically. Other than Abby Joseph Cohen, nobody off-line made any of these people any money. But the online people tend to embrace online stocks, which have been the big secular winners. (The online guys help the cause by understanding how to manage their own stocks through savvy use of press releases and plants on the boards themselves.)
The online yahoos have made you more money than the off-line, highly paid research analysts. To online people, Wall Street analysts really are penguins. They would rather follow living, breathing, obviously long individuals whom they don't know to the promised land than penguins to the slaughter of investment banking.
If the off-line brokers understood this they would start to get the revolution that is occurring all around them rather than fighting it. In 1999 they will get it or die.
James J. Cramer is manager of a hedge fund and co-chairman of TheStreet.com. 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.