March 26, 2000

Personal-Finance Sites, in Search of Novelty

By MICHELLE LEDER

emember a few years ago, when those newfangled Web sites that allow investors to track their investments online seemed like the best invention since, well, mutual funds?

Now, of course, most any personal-finance site worth its silicon offers customized portfolio tracking and a seemingly endless array of news and research. And the number of sites keeps growing: by some counts, there are now 15,000 devoted to personal finance, making it a close runner-up to sex as the most popular Web category.

Amid so much financial advice, many of the newest sites are trying to differentiate themselves by zeroing in on specific investment subjects, narrow strategies and esoteric tools.

"These sites are proliferating wildly," said Robert F. Sterling, an analyst at Jupiter Communications. "We're seeing people coming in all the time with new niche plays and new ideas. They're addressing smaller needs to try and target their marketing."

The surge has created something of a cottage industry as companies vie to track the various sites. One of the largest, Investorama, has links to more than 14,000 sites and plans to add 1,800 links soon, said the founder, Doug Gerlach. OnlineInvestor, a monthly print magazine based in Oak Brook, Ill., includes scores of site reviews in each issue; in its first year and a half, it has offered more than 500. "In a typical month, I learn about 75 new sites; a year ago, that number was maybe 20," said Jan Parr, the magazine's editor. Practically all the new sites are niche players.

Here is a sampling of some recent offerings:

-- Epredict.com. Using the type of polling more commonly associated with political races, the site surveys visitors on their feelings about specific stocks. Anyone who fills out the multiple-choice survey receives the results of the poll the next day via e-mail. Eventually, the site hopes to use its visitors' collective wisdom to start a mutual fund, said John Kaminski, Epredict's vice president for business development.

-- Gainskeeper.com. Focusing on one of the biggest problems for active traders -- completing Schedule D, the federal tax form for capital gains and losses -- the site helps track holdings and their associated tax implications. Investors enter their holdings on a secure site that is updated daily. One of the site's biggest selling points is that it keeps track of stock splits and other corporate actions, a niche service with which other sites have struggled. "You can't do this with software," said Duncan Routh, co-founder of the site. "You have to have a staff that's capable of analyzing each corporate action."

-- IExchange.com. On this site, amateur analysts can offer written research, available for purchase, on a variety of stocks. The better their track record, the higher the price the analysts can charge, though most reports cost $3 or less. Contributors are asked to submit a target price for each stock; most also explain the reasoning behind their picks. IExchange tracks the performance, paying cash rewards for top picks and splitting proceeds from the research sales.

-- Validea.com. This site tracks the records of professional stock pickers and pundits, assigning ratings based on performance. John Reese, the founder, said he created the site after poring over various business magazines, Web sites and television programs in search of stock tips. Investors can track analysts by name or by publication. The site already has 50,000 recommendations in its database.

any personal-finance Web sites can have difficulty turning profits.

Already, Ms. Parr and Mr. Sterling said they had seen a number of innovative sites fold or sell out to larger players.

"It's hard to drive revenue on these things because nobody wants to pay for the information, and advertising revenues only go so far," Mr. Sterling said.

Still, both say there is room for more sites -- and they expect their numbers to keep growing over the next few years.