For equity investors, the wild market volatility of the past few weeks has been cause for palpitating hearts. But those active in online trading communities, where members can see others’ recent investing moves, are taking solace in observing how their peers are reacting. “Just the fact that I’m seeing people in there buying calls [an equity option that bets on rising prices] and common stock has given me confidence that others are also buying on the dip,” says Jim Collins of Brooklyn, N.Y., who opened an account with TradeKing in January.

Like other areas of the Internet, online trading sites are turning into shared experiences. Only one big discount broker, E*Trade Financial, has made a foray into collaborative Web 2.0 capabilities with its 1999 acquisition of investment community site ClearStation. But a handful of newer brokers, with fewer than 200,000 accounts among them, have made social networking a cornerstone of their platforms.

While their concepts and tools may differ slightly, TradeKing, Zecco Holdings, and thinkorswim all operate on the premise that the networking features they offer encourage more trading. On TradeKing and ZeccoShare, the social networking portal of Zecco Holdings, members create profiles that show their investing strategies, key stocks they follow, and if they wish, their recent trades. TradeKing users can even publish blogs to share their investment ideas and thoughts about market conditions.

Thinkorswim, a unit of investor education company Investools, emphasizes learning. Although the site, which launched in late 2000, has a Web-based trading platform, its free Java-based software lets customers view presentations, listen to live audio broadcasts, and meet in chat rooms. Later in September, users will be able to see news and instructional feeds via live streaming video.

TRUSTWORTHY SOURCES
The advent of trading sites centered on social media is a reaction in part to the Wild West world of online investing. Because the sites do background checks before approving account holders, customers can feel more confident they’re getting credible information from trustworthy sources.

By incorporating message boards, blogs, chat rooms, and podcasts, the new sites also reflect growing demand for two-way flows of information. Investors no longer want to be just on the receiving end of content, says TradeKing Chief Executive Donato Montanaro, who helped launch the site in December, 2005, from Boca Raton, Fla. Montanaro, previously head of online trading at former discount brokerage Quick & Reilly and founder of deep-discount firm SureTrade, is convinced social networking features encourage trading. Roughly 2,000 to 2,500, or slightly less than 5%, of TradeKing account holders are active either blogging or publishing their trades. “That 5% makes up just over 10% of the site’s revenue, so clearly investors who network more trade more,” he says. He estimates the number of active users has doubled over the past six months.

Zecco Trading, which began in October, 2006, says it has 42,000 accounts and has been adding 1,600 to 2,000 a week, while the number of active customers at thinkorswim has tripled, to about 45,000, over the past 18 months, says Investools President Tom Sosnoff.

Except for Zecco—the name stands for zero commission costs—where customers don’t pay for their first 10 stock trades a day, or 40 trades a month, commissions at these brokers can be as low as $5 per stock transaction, 25% to 60% lower than fees at traditional online brokers. Options trades can cost as little as $1.50 plus a per-contract fee, at least 75% below the more established brokers.

The growing popularity of these sites raises questions about security. TradeKing is governed by the new Financial Industry Regulatory Authority (FINRA). TradeKing keeps FINRA informed of new features, such as the year-old certified trades function, which shows the quantity and price of actual shares traded by customers. “Being a regulated entity, this would be a stupid place to perpetrate a scheme because you’re creating a trail attached to your name,” Montanaro says.

TradeKing officials also review every blog entry and remove unethical or potentially harmful comments. The company has no suitability rules beyond the warnings listed under the disclosures and terms and conditions tabs on its site, which customers are supposed to read before opening an account.

Zecco Trading requires applicants to fill out a suitability form listing income, investment history, and experience using various financial instruments and options strategies. It then permits each user to trade options only up to a certain level of complexity, says Timothy Krause, director of risk management.

At thinkorswim, where 80% of the transactions are in options, the very complexity of the trading encourages participation in an investor community, says Sosnoff. TradeKing will be adding several new features in mid-September. One, the ability for users to share their certified trades without revealing the number of shares bought or sold, grew out of feedback on the blogs. Farther down the road, TradeKing plans to roll out a tool that will allow searches for members who have had the best returns on investment over time.

Collins, who worked for 10 years on the sell side for brokerages such as Lehman Brothers, says he has been getting investment ideas from other TradeKing members commenting on his blog posts. When he reported an interest in engineering and construction companies and the success he’d had in buying options ahead of Foster Wheeler Ltd.’s ( ) first-quarter earnings, somebody recommended Perini Corp ( ). In the second quarter, “the earnings went through the moon. I sold it with a 100% gain” on Aug. 8, he says.

Whether these sites can unleash the wisdom of the crowd for market players remains to be seen. But you can bet that in investing, as in other corners of the Web, the urge for community will grow stronger—and the bigger players may have to respond to the upstarts.

about the value of social networking. READER REVIEWS

Vladimir Putin today compared the proposed US defence shield to the 1962 Cuban missile crisis that pushed the US and the Soviet Union to the brink of nuclear war.

“Analogous actions by the Soviet Union when it deployed rockets on Cuba provoked the Cuban missile crisis,” the Russian president said after an EU-Russia summit in Portugal.

“For us, technologically, the situation is very similar. On our borders such threats to our country are being created.”

Earlier, the commander of Russia’s rocket forces said his country was capable of quickly turning out short and medium-range nuclear missiles.

“If there is a political decision to make such a class of missile, then it is obvious that they will be made in Russia in the near future because we have everything we need,” General Nikolai Solovtsov was quoted by the RIA news agency as saying.

“Today we are in [arms control] agreements so we act strictly within those agreements.”

Mr Putin this month told the US secretary of state, Condoleezza Rice, that Russia would find it difficult to stay in the intermediate-range nuclear forces treaty (INF), signed by Mikhail Gorbachev and Ronald Reagan in December 1987.

That milestone treaty obliged the US and Russia to destroy all ground-launched ballistic and cruise missiles with a range of between 300 to 3,300 miles. The two scrapped 2,692 missiles as a result of the treaty.

Russian military officials and politicians now describe the INF treaty as a relic of the cold war because it began as a bilateral treaty limiting only the US and Russia, plus most of the successor states of the Soviet Union.

Other countries such as North Korea, Iran, Israel, India, and Pakistan have since started building arsenals of intermediate-range missiles. None are constrained by the INF treaty.

American plans to build elements of a missile shield in the Czech Republic and Poland have particularly angered Russia.

Mr Putin, who has significantly boosted Russian defence spending, said the west has taken advantage of Russia’s willingness to strike arms deals in the 1990s to strengthen its defences in subsequent years at Moscow’s expense. In retaliation, Mr Putin announced plans to withdraw from the conventional forces in Europe treaty.

In the 1962 crisis, the Soviet Union stationed nuclear missiles in Cuba, 78 miles from Florida, to the consternation of the US.

President John F Kennedy ordered a naval blockade, ignoring advice from some of his military advisers to launch an air strike against targets in Cuba. The confrontation only ended after the then Russian leader, Nikita Khrushchev, agreed to withdraw the missiles.

Mr Putin added: “Thank God, we do not have any Cuban missile crisis now and this is above all because of the fundamental way relations between Russia and the United States and Europe have changed.”

For Nissan Motor («www.businessweek.com») Chief Executive «investing.businessweek.com», 2007 looks as if it’s ending a lot better than it started. Today in Tokyo, Ghosn took time out from the Tokyo Motor Show, which opens to the public Oct. 27, to announce the Japanese automaker’s interim results.

In sharp contrast to fiscal 2006, which ended with Nissan’s operating profits falling for the first time in six years—for the year ending Mar. 30—Ghosn revealed steady sales and operating earnings growth for the six months through September.

For the period, Nissan’s sales rose 11.7% to $42.4 billion. While net income dropped 22.5% because of exceptional gains the year before, the all-important operating profit figure rose 5.3% to $3.1 billion. What’s more, despite falling industry sales in the U.S., Europe, and Japan, vehicle sales increased 6.3% during the six months, to 1.8 million units, and Ghosn reiterated that Nissan will sell 3.7 million vehicles for the full year, a record for the company. “We’ve made progress on many fronts. We’re on track to deliver our full-year objectives,” Ghosn told reporters at a press conference at Nissan’s headquarters in Tokyo’s Ginza district.

Nissan’s operating margin is regaining ground on Toyota Motor («www.businessweek.com»), which, at over 10% in the last quarter, is the most profitable Japanese automaker. Nissan’s increased to 8.4% in the three months ending September, compared to 6.1% in the April-June quarter. Overcoming Disturbing Difficulties

Indeed, while Nissan’s earnings don’t stack up particularly well when compared to Honda Motor («www.businessweek.com»), which posted stellar six-month operating earnings of $4.5 billion a day earlier—a rise of 28.1%—Ghosn can breathe a sigh of relief that problems from earlier in the year are fading.

Those difficulties shouldn’t be underestimated. After Nissan made an embarrassing (BusinessWeek.com, 2/5/07), $4.7 billion was wiped off its stock price with one stroke. Then in April, the company’s full-year results missed several self-imposed targets—a disturbing sign, since meeting tough challenges had been a hallmark of Ghosn’s success at the company.

The shortfalls caused some analysts to question Ghosn’s dual role as chief of Nissan and France’s «investing.businessweek.com», which holds a controlling stake in the Japanese carmaker. Today’s results suggest the company is getting back on track. “When you consider the problems they had, and compared with the industry as a whole, Nissan’s profitability is pretty good,” says Ashvin Chotai, director of Asian Automotive Industry Research at «investing.businessweek.com». Pessimistic on Future Sales

Ghosn, who added that Nissan expects to meet its profit and sales targets for the current financial year, could also point to increasing market share in stagnant, mature auto markets. In the U.S., where Nissan makes about 60% of its operating profits, sales increased 5.4% in the six months through September, compared to an overall market contraction of 2.4%, on solid sales of the Versa subcompact and Altima sedan. That advance helped Nissan’s market share rise half a percentage point to 6.3%.

For all that, Ghosn was still downbeat on U.S. industry sales for this year and next, projecting vehicle sales of 15.5 million to 16 million in 2008, compared to an expected 16 million this year. “We don’t foresee a growing market in 2008 in the U.S.” he said. “This will have an impact on all car manufacturers.”

In Europe, another stagnating market, Nissan’s sales rose 10.5% to 304,000, driven by a doubling of sales in Russia. And in Japan’s distressed auto market, which has shrunk for 26 months in a row, Nissan’s sales fell 5% to 332,000, although even that was better than other automakers and enabled Nissan’s share to increase by half a percentage point, to 13.4%. Hot Cars, Hot Topics

The better than expected results came after a confident performance from Ghosn at the Tokyo Motor Show. On Oct. 24, onlookers on a packed show floor watched Ghosn show off Nissan’s new GT-R supercar, which revives the brand after a five-year hiatus. The consensus at the show—and on blogs—was that it was (BusinessWeek.com, 10/24/07).

Still, it’s perhaps another big (BusinessWeek.com, 4/23/07)—a $3,000 car to be developed by Nissan, Renault, and Indian partner «investing.businessweek.com»—that could really test Ghosn’s mettle in the coming months.

The supercheap car has been a hot topic on the edges of the Tokyo show, although most industry insiders seemed decidedly pessimistic about its chances. Ghosn remains confident. He reckons a three-way partnership could be ready to enter production by 2010—not too long after Indian automaker «investing.businessweek.com» is expected to show off an ultra-low-cost car at the Delhi auto show in January. “Cost is the main challenge and we have to make it robust,” Ghosn says. But is it possible? “Certainly it is. We know Tata is announcing this car in the Indian market in 2008. And if Tata can do it, we can do it.”