Part 2 : Online investing and Amazon.com

Thinking now of the Internet as a source of stock and company information - do you have any advice for those investing on the basis of info they pick up from online sources?
The wealth of tools and research information now available to the online investor is wonderful. Given my previous life with Raging Bull, I believe that online message boards, when read with the proper dose of skepticism, can be good starting points for research and ideas. But you've got to do your homework.

Try this out. Don't trust anyone online, until they give you a reason to trust them. It's not a nice way to look at things, but will probably save you from getting burned by "hot investment tips." Look, even the so-called pros got fooled. Recently, we saw a prankster was able to con a wire service into releasing a bogus press release. The company's stock price was cut in half on the news. So this goes back to my first point. Trust no one online until you have a reason to - build relationships over time....and please use common sense!

If I prefer to let a fund manager take care of my Internet investments, what do I need to look for when choosing the right fund and organization?
Well, I'm not an investment advisor per se, so this is a decision that you really should be making with the help of your financial advisor, lawyer or broker. Obviously, there are lots of so called Internet funds out there.

What you really need to do is figure out your risk tolerance and investment horizon before you look at any of them. A lot of funds masquerading as "Net funds" really have mostly old line tech stock names in them. That's not necessarily bad. It just shows the wide variety out there. Definitely find a manager with a proven track record that has run the mutual fund you're looking at for a while.

Finally, funds are great- but I am a big believer in the power of individual investors. We can be just as smart in many cases as the big boys if we realize our limitations. I think online investment clubs are a great idea and maybe something else that some readers may want to consider and explore.

Finally, Matt, would you buy shares in Amazon?
Well, I've got some interesting thoughts particularly today on this. As I'm working on my upcoming book I happen to be interviewing a lot of Internet company founders. I recently spoke to the head of a dot com based in Seattle near Amazon's headquarters.

We both seemed to agree not that Amazon is doomed, but that we are both worried about how this negative press and analyst criticism is affecting Amazon's employees. Human capital is everything for a digital business. Weaken that core too much and you are toast. In terms of buying Amazon today - no, I wouldn't touch it. Too many question marks on many areas besides just proving profitability - I'm talking about management turmoil and drastically slowing sequential sales growth (almost flat now!).

However, if we saw Amazon's stock get cut in half from these levels I would start nibbling. E-commerce is very real - Amazon will remain the king of consumer e-commerce and there will end up being a big payout to the victor. It's really a question though of how long it takes Amazon to mature and reach this point. So for the regular investor - there are many better places to park some funds right now!