One out of five retail trades took place online in the first half of 1998, estimates Piper Jaffray. Sometimes this milestone is reached on a single day, adds Schwab Co-CEO David Pottruck. And the number of online investors is growing fast. The online financial services market will penetrate 21 million households by 2003 estimates Forrester Research. These figures vividly illustrate why the Internet is such a success in financial services.
Many observers wonder why Internet stocks are over- priced.
Reasons range from optimistic baby-boomers, to an incestuous investment community, to small floats. These investors power Internet stock prices through self-fulfilling prophecies. Even as Wall Street takes a breather, many of these Internet investors are taking profits while looking for new bargains. While it remains to be seen how far their optimism can be pushed, the last boomers will reach age 40 by 2000. This means that more than 60 million consumers will be in their peak spending and investing years.