On the Road and Wired for Riches

Overall, Durbin has been using on-line investing to manage about half of his portfolio. He estimates that he executes about 10 to 12 trades a year. "I am more of an investor than a trader, because I tend to get in and stay in," he says.

Mixing investing with consulting

Durbin is not alone. The way George Davis sees it, consultants have an interesting perspective on the business world that gives them a leg up in the world of investing — and they should not be shy about using it. "I find opportunities by trusting my intuition as a consultant," says Davis (not his real name), a consultant with a strategy firm. "As a strategy consultant, I think about the New Economy with a longer-term perspective of 12 to 18 months that looks beyond the typical analysts' view. This gives me the opportunity to see where the future is going and invest accordingly." Davis has been trading on-line for about six months, and estimates he has executed about 30 trades in that time.

On-line investing gives Dinesh Moorjani, a senior analyst with e-strategy firm Mainspring in Cambridge, MA, a better understanding of what is happening in the marketplace. By following companies and industries for potential investments, "I begin to see how executive decisions affect a company's stock price and the market as a whole," he says. For example, he is working within an industry in which recent deregulation will allow the previously impossible merger of two particular companies. "If I see 20% stock price increase as a result of this merger, I also see how the market is rewarding companies that undertake these transactions."
In Davis's opinion, consultants expand their client focus and begin leveraging their knowledge more for their own benefit, not just the client's. "Often, consultants see trends in the marketplace, and think about them in terms of a business model for a client, and then move on," he says. A better approach is to maintain a "healthy balance between creating value for clients on one hand, and on the other using the overall information gathered — combined with following and trusting your intuition — to make your own investing decisions."
Of course, some consultants eschew on-line investing altogether, unmoved by tales of better consulting making better investments, and vice versa. Many consultants simply say that they are just too busy to do their own investing. "I barely have time to call my clients," says one consultant.

Getting plugged in

In addition to their broad business perspective, consultants are also often privy to useful tidbits like industry gossip and news that can be useful starting points for more in-depth research into a particular company or industry. Victor Mojo, head of e-business strategy for Technology & Business Integrators in Woodcliff Lake, NJ, relies on the industry buzz he hears in the course of his work to supplement information from on-line and print media to identify potential investments.
"I am often able to conduct some analyses of companies with information gleaned over the Internet and directly from my on-line broker," he says. "I find a tremendous amount of information on-line from a variety of sources that provide enough information to put together a trend analysis. The key is to slice and dice news stories to get the information you need to evaluate a stock."

Mojo began handling his own investing on-line with a small portion of his portfolio about three years ago, leaving the rest in the hands of a financial planner. "I started out with $10,000 to speculate, and made some money in tech stocks," he says. "I now trade 10 or 12 times that amount on-line." The portion of his portfolio that he manages himself is mostly in technology and biotechnology stocks, and he routinely brings more companies to the attention of his portfolio manager.
"You start out slowly and then, after some wins, people tend to be a lot braver and more adventurous and take a more robust look at investing," says Mojo. "They make up their minds that they can lose this money." He noted that a lot of consultants he knows limit their on-line trading activity to technology stocks and leave their blue-chip investments untouched. Mojo himself allots only a small portion of his overall portfolio to high-risk investments. "I gravitate to e-business companies because that is what I know," he says.
With competition heating up among on-line brokers, the quality of the information available from them is getting better and better. For example, Durbin points to his on-line broker's e-mail alerts with information about the stocks on his watch list as a key tool. This information includes price or volume changes, earnings, and reports due on a company. "This is the tool I use the most," he says, noting that he is invested in or watching 25 to 30 stocks at any given time.

Durbin also supplements this information with information gleaned in his regular professional reading and conversations with colleagues who work in specific information through casual and work-related conversations," he says. "We talk about companies' prospects and trade investment ideas."

A fine line

Of course, using insight gained in the course of their consulting work to make better investment decisions requires that consultants walk a very fine line between using general knowledge and specific insider company information. "I am careful and cautious in how I access information," says Moorjani. "I don't invest in stocks with a direct link to someone with knowledge of the company within the firm."
As a partner in his firm, Durbin is also cautious, and takes pains to avoid even the appearance of a conflict of interest. "Although I weave [investing] into the fabric of what I do, conflicts in interest must be balanced carefully, so I don't weave things too closely together." Moreover, he views investing as a hobby that he makes sure is not directly related to what his clients are doing.
Potential misuse of information may be less of a concern to some consultants based on their level and the type of work they do. For example, in his role, Mojo has no affiliation with vendors that would cause problems with potential investments in them. "We make client recommendations by evaluating RFPs, so conflict is never an issue."
Others simply say that insider information rarely comes their way. In general, "I don't have access to information that is any better than that available to the general public," says Davis, who is a fourth-year consultant. "What we have is a future perspective that allows us to see what is really happening, and that is the intangible benefit."

Keeping things in perspective

Overall, these consultants work hard to keep investing in its place in their professional lives. "If you get too involved in this, you become a day trader," says Mojo, who spends about 10 hours a week on his investments, most of it on the weekends.
For individuals who want to get started in on-line investing, Moorjani recommends that they choose an on-line broker carefully. "There is a huge dichotomy in speed, convenience, and on-line functionality," he warned. "Be aware of the differences."
Mojo advises newcomers to on-line investing to start with a small sum, say $5,000, until they are more comfortable and confident with this way of investing. "There is a risk in putting in a buy order, but hitting the 'Submit' button is the height of the adrenaline rush," he says.

Sidebar: PowerPoints:

• The work and travel habits of consultants, not to mention their disposable income, make them well-suited for the after-hours world of on-line trading.
• In addition to their broad business perspective, consultants are also often privy to useful tidbits like industry gossip and news that can be useful starting points for more in-depth research into a particular company or industry.
• In general, consultants say they don't have access to information that is any better than that available to the general public. But they may have a greater focus or insight due to their professional reading and conversations with colleagues who work in specific industry sectors.