Serious Money: Online advice for the personal investor comes in many forms and is similar to much of the content of the Web: it is chaotic, unregulated and of extremely variable quality, writes Chris Johns.
The better websites - of which there is an increasing number - offer sound advice; the not so good sites have content similar to those tip sheets sold outside race courses and dog tracks.
A regular trawl through the best sites is always a worthwhile exercise, if only to reassure ourselves that we are not missing anything obvious. We get to find out what is exercising the minds of other individual investors - this often throws up a surprise or two - and we might even come across a good investment idea, although this is disappointingly rare.
Most good online finance sites have a heavy US orientation, but some, like Yahoo, are beginning to introduce a more European focus, albeit one heavily skewed towards the UK. This is not surprising, and not just an example of Anglo-Saxon insularity: the US and UK equity markets are the largest and most liquid in the world.
The Motley Fool is one of the best - in terms of sensible advice - and one of the more established sites. In medieval times, the fool was the only person who could speak the truth to the king without risking decapitation; the founders of the site make no bones about their belief that the finance industry is full of people who have an uneasy relationship with the truth.
The fool's obsession is with early retirement, which suggests that most of its readers share the same goal, and it recycles some fairly commonsense ideas.
The main recommendations are usually variants on familiar themes: start saving early, save a lot and do your own investing through a discount broker. This last recommendation might surprise a lot of European investors but it is a reflection of US disenchantment with the performance of many fund managers, corruption scandals at some mutual fund houses, the fees they charge and the proliferation of low-cost, often online, stockbrokers.
Although discount brokers do exist in Europe, they are fewer in number, are rarely as cheap as their US counterparts and tend to be based in London, requiring access to a sterling bank account. None of this means that we should not do our own trading but it does require us to be more organised than US investors who are spoiled for choice.
US tax and retirement legislation means that individuals have better access to their pension funds, but rule changes here in Ireland are moving in that direction, particularly for the self- employed.
The investing principles espoused by the Motley Fool are simple and would be applauded by Warren Buffet - or any "value" based investor. We don't find too many recommendations for flaky tech stocks but there is lots of analysis of companies which pay a high dividend. We find stories about "three boring businesses that can make you rich". This is not a site for those looking for the latest trendy idea suitable for day trading.
MSN Money is a joint venture between Microsoft and CNBC, the well-known finance television channel. It has grown from being a purely US site and has expanded into Europe and Japan.
MSN polls its readers to find out the most popular stories of the moment and publishes the results. Surprisingly, the most popular features on the site, by a mile, are those that deal with identity theft, debt collection and bankruptcy. In fact, how to safeguard one's identity from those who would clone you and, in particular, your credit cards, is the favourite part of the site. Not much sign of an interesting investment idea there.
As I write, the top three features on the UK MSN Money site include one about the attractions of dividend-paying stocks and one about discount brokers. The other urges investors to stop taking unnecessary risk in equity markets. A pattern is emerging whereby the interests and concerns of ordinary investors are revealed. Most interestingly, share tipping and other forms of direct investment advice that we might have expected to top the popularity league tables are low down on readers' list of priorities. Intelligent long-term investment strategies are being put in front of the individual investor rather than the latest hot tip.
The repeated mention of high dividend equities probably reflects two things. First, there is an emerging consensus that the overall stock market is going precisely nowhere for a prolonged period of time.
In such circumstances you might as well try to get some return from dividends if capital gains look likely to be meagre. Second, investors are becoming more mature and realise that get-rich-quick strategies might be more fun but are about as likely to be successful as buying a lottery ticket.
It is hard to argue with the conclusion that markets are likely to trade sideways for the foreseeable future. But it is interesting that most people now seem to believe this. Most financial websites contain surprisingly little that is bullish and have recently devoted considerable space to the views of people like Bill Gross, the manager of the world's largest bond fund, PIMCO, and Stephen Roach, chief economist at Morgan Stanley, who both have quite an apocalyptic perspective on the global outlook. Contrarians, particularly optimistic ones, will take comfort from this.
Perhaps the most surprising thing of all is that so much sensible analysis, data provision and commentary is available free of charge. We might worry that we get what we pay for but much that is out there is of high quality. That so many investors are better informed than ever is as good a reason as any to be optimistic about the market outlook.
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