Impact of Information Technology on the Stock Market

The Economy is undergoing a unique transformation, which has been driven by a technological revolution in the 1990s, and into the new millennium. In that technical revolution, innovations in computer processing, software, telecommunications and the evolution of the Internet have come together to create the information economy. Communication between companies and their partner, suppliers, distributors, and consumers has changed information technology drastically. The Internet has changed business so radically, that many have compared it to historical events such as the discovery of electricity or the introduction of the automobile. The information technology world has had an enormous impact on the stock market in ways such as: technology soars in the Stock Market, information technology enhances investor growth, information technology lessens the role of the personal investment broker, however there are negative aspects of information technology for the investors. Technology soars in the realms of the Stock Market. Information technology is the largest of the three sectors. The three sectors are made up of the agricultural sector, the industrial sector, and the sector we are currently in, which is the information technology sector. Each sector has each gone through its own revolution. First, there was the agricultural revolution, then the industrial revolution, and now we are in the information revolution. Yet are we, in fact, in the middle of a revolutionary jump? Are we seeing and living through a continuos or a discontinuous change in human society? (Kuhn, 1962; Zey, 1993; Kelly 1994) I believe we are in a continuous change in society. More than half of the worlds population is on-line, and more people sign on everyday. It

is not only changing in the homes of people, but it is also changing at their workplace. More and more businesses are logging on and creating their own web pages. It allows the smaller companies to be able to compete with the big dogs. Information technology based companies have a high market value. Companies create higher market value with expanded services using information technology. Some reasons for the higher market values are the expanded reach of the consumers and competitors. The consumers have a great access to more companies that offer the same product or service. This allows consumers to find the best product at the best price, and to deal with whatever company they want, big or small. In turn smaller competitors can gain higher market values through the Internet because they and their products or services become more accessible to the consumers that are searching for better and cheaper products. This allows them to have a much larger span. The Internet makes them accessible in the global market. Being more accessible will give them the opportunity to pick up a bigger market share, and give them a greater market value. Ultimately, it will give them the ability to compete with the larger corporations. It is also predicted that information technology based companies will drive growth in the Stock Market. Information technology enhances investor growth. The Internet has created global availability of information. Although there are the Haves and the Have Nots regarding technology and technical know how, the Internet and the World Wide Web, the global open market and pop culture, and the Information Age economy is quickly spreading throughout the world. (Stock, 1993; Toffler,1990; Centron and Daries, 1991) The global society is grounded in an information economy. Our economy centers around the production, distribution, organization, and utilization of information and

knowledge. (Drucker, 1993; Bell, 1996) New Stock market forecasting products such as streaming stock prices have been created. Also the financial statements for most corporations have been published for public use on the World Wide Web. The access of this public information makes it easier for more investors to have the information they need to make smart, well-educated decisions for investing. Since investors are able to be better educated about investing, more investors have entered the market. Participating in the market is not only easier, but also cheaper. Since the information is out there for everyone to see, more and more people are becoming their own investors, cutting out the middleman, which is the broker. Cutting out the middleman allows the investor to keep the percentage of money he used to pay the broker. The role of the personal investment broker is lessened by information technology in todays Stock Market. Key developments can be received through new communication networks. Through the Internet an investor can find large amounts of information on the Stock Market and many corporations. New technology also allows investors to be able to buy and sell stock and bonds on-line. The investor can maintain on-line brokerage accounts. An investor can do this either by keeping up with their accounts daily of by putting a low or high cap one each stock. An investor can also get information on particular stocks and the history of these stocks. In some cases an investor can receive on-line advice from a broker if they need help. However, easy as it is for individual investors to get on-line and invest for themselves, there are negative aspects of the information technology age for investors. Distorted facts are possible with such a plethora of information. Investors looking for information may find the wrong information or information that has been cooked,

changed, or distorted in the corporations favor. Also, the more information there is out there, the harder it is to find the information you need because you have to trudge through all the excessive information. When a broker makes a decision to invest, the decision is based on many different things such as the buying and selling price for the past couple years, the stocks beta, etc With ease and inexpensive access brings unsophisticated investors. The unsophisticated investor thinks to themselves, how hard could it be? They do not know what they are doing and lose their money. They also start seeing huge dollar signs and wait too late to sell. What generally happens is the investor will invest around $5,000. The stock will make them $10,000. At this point the investor should sell, but they get greedy, and they lose everything. They lose everything and are unsophisticated investors because the individual lacks the proper education to invest seriously in the Stock Market. They also usually invest in highly unstable stocks because they do not do their research. All they see is the huge increases the stock is making. However, usually unstable stocks that make dramatic and sudden increases will usually make even more dramatic decreases and catch most people off guard. The statistics are convincing: information technology represents less than 10 percent of the economy, but accounts for more than one third of U.S. economic growth over the last five years. (Sohn) Still, information and communication technology and a world wide system of information exchange has been building growth for over a hundred years and physical technology and industry is not slowing down in growth rather it is accelerating. (Kelly, 1994; Zey, 1993) This global information system is not simply being layered on top of existing structures, but is being infused into the human environment. It can be argued that information technology robs individuals of personal

contact. Whether it is good or bad, information technology is a major force in the stock market of the new millennium.

Power Point Presentation On the Power Point Presentation I took the Outline for my paper and used it for the actual points. I did this because Power Point is basically a summery of the paper. The four major points that I used were I. Technology Soars in the Stock Market, II. IT Enhances Investor Growth, III. IT Lessens the Role of the Personal Investment Broker, and IV. Negative Aspects of IT for Investors. Along with the points in the presentation I went with some animated clip arts that I thought would fit with the points. I also went in and selected a certain transition for each slide. The entire Presentation is automatic because I also went in and put a timer on each slide. To view the Power Point Presentation click the link on the opening page.

Excel Document On the Excel Document titled On-line Trading Comparison, I took four on-line traders. These traders are E*Trade, Ameritrade, Scottrade, and Schwab. On each of these I compared Stock limit Order, Stock Market Order, Options Limit Order, Options Market Order, Margin Rate for Active Traders, Streaming Applet with Stock Option Trading, and Execution Guarantee. The results are very informational and interesting. If it were me I would go with Ameritrade. To see the Excel Document just click the link on the opening page.

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