FOOL ON THE HILL
Grassroots Investing

At a time when major corporations and dot-coms have made a bigger splash as punch lines than feeding lines, it's important to remember that stocks still matter -- and the Internet can still make you a smarter investor.

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By Rick Aristotle Munarriz (TMF Edible)
September 23, 2002

Where were you when the market topped?

Richer? Happier? Less jaded?

I hear you. But there's a much smaller subset of investors that is richer, happier, and -- let's be frank -- fatter than it was back in the spring of 2000. I'm talking, of course, about Krispy Kreme (NYSE: KKD) shareholders. The doughnut masters went public in April of that year, just weeks after the Nasdaq maxed out on its bull run.

The new offering popped at the open and really hasn't looked back since. Despite valuation concerns, health trend issues, and the huge amount of short interest, the stock has more than tripled off its market debut premium.

The fact that the company has overdelivered at a time when many other stocks have called in sick has helped (it has topped estimates like chocolate icing on a glazed original every single quarter over the past year). But while this humble North Carolinian institution had been slow to expand before its 2000 infusion of capital, odds are you were exposed to the mania behind the modesty if you were online.

The Web is as wide as it is deep, and newsgroup testimonials float around in cyberspace. Forever. Krispy Kreme appreciation pages such as this clever chronicle or this financially seasoned lovefest are everywhere. Google spits back more than 55,000 pages with a Krispy Kreme reference, many of them chock full of fanatical glee. The much larger Dunkin' Donuts chain has just a few more listings, and most of them are dry corporate mentions.

While I'm sure somebody's firing up Photoshop right now to prepare a "separated at birth" webpage matching Tyco's (NYSE: TYC) Dennis Kozlowski and Microsoft's (Nasdaq: MSFT) Steve Ballmer, I'd have to look pretty hard to find a Kmart (NYSE: KM) appreciation page. I'd be hard-pressed to find a heart-pounding homage to Enron or a personal homepage singing the praises of customer service at Six Flags (NYSE: PKS).

By definition, a net catches what you want, with the undesirable elements slipping through the mesh. The Net works pretty much the same way, spam and pop-ups notwithstanding. If you've never seen The Sopranos, a quick trip out to Sopranoland.com will get you up to speed. By the same token, investing neophytes who manage to click through just a few pages of our Fool's School area are often better prepared for the investing challenges that lie ahead than folks who have been in the market for years.

Before the Web, grassroots investing went as far as your collection of lawn gnomes. Today, you have access to everybody's grassroots. Simply put, the world is your turf, and green is everywhere.

I was familiar with Starbucks (Nasdaq: SBUX) and its plans for world domination years before the mocha pushers landed in Miami. I can say the same thing about Wal-Mart (NYSE: WMT) and Lowe's (NYSE: LOW).

The Internet has made investing more efficient. Every step of the process, from the accumulation of research to order fulfillment, has been filtered for your convenience. Maybe I'm showing my age, but I remember when I had to call a company's investor relations department to request an annual report and recent filings, only to watch the days roll by at the mercy of postal delivery. And I'm just 35.

But, you know what? The art of scouring for financials, finding a broker, and trading online are great, but they're still not the killer app. Yes, these things quicken the educational process, but it's the interactive smorgasbord of information that really gives the individual investor a meaty advantage.

Considering Outback Steakhouse (NYSE: OSI) as an investment? You'll be happy to know that the casual dining chain is recommended by 91% of the 406 reviewers at Epinions.com. Want to know what gamers think of the latest Electronic Arts (Nasdaq: ERTS) title? Epinions has that, as well as any online retailer worth its critical salt. Sites such as Amazon.com (Nasdaq: AMZN) will provide you with even more nuggets of insight through perpetually updated best-seller lists.

There was a time when gauging consumer reaction and checking the retail channels was the work of analysts at full-service brokerage firms. Now, you can be a bigger recluse than Emily Dickinson and still collect a wealth of public opinion, as long as your hermit habitat is wired to the Web.

Information. Take it for granted if you must, but please, take it. You can apply it to your personal life. I know folks who won't step into a movie theater unless the film has garnered high ripe marks at Rotten Tomatoes. You don't have to hit the local library to scour the Consumer Reports archives the next time you make a buying decision. Spare your toe from some serious stubbing and let others kick the tires for you.

If there's wisdom in walking a mile in another man's shoes, imagine that man is Imelda Marcos and you have her once-massive collection of shoes at your disposal. The Internet is like that, you know. Just because the dot-com bubble burst doesn't mean that the bubble blower is suddenly irrelevant. By the same token, the fact that this past year has been riddled with accounting shenanigans hasn't rendered the art of investing obsolete.

So where were you when the market topped? Online, perhaps? But what did you learn?

Rick Aristotle Munarriz is probably online right now. Rick's stock holdings can be viewed online, as can the Fool's disclosure policy.