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The Daily Dow LEXINGTON, Kentucky (November 21) -- One of the things we do here at The Motley Fool is poke fun at the traditional financial media. Hey, we're Fools, that's what we do. But we're not stupid, and when the mainstream media does something right, it's only fair that we point that out too. One of the best new things on AOL, in my opinion, is the Dow Jones Business Center. In that one area, you can get news stories from Dow Jones sources, analyst upgrades, and the typical news material one would expect from a company with lots of resources. (Hey, they can even list their news stories in chronological order, something AOL's Company News has yet to figure out!) But my real goal today is to point you to an article by Vanessa O'Connell of The Wall Street Journal. Her column in the Money Matters section this morning is one I've been thinking about writing for a while, but she did a better job on it than I could have done, so I'll just summarize it here and point you to her article for the details. The focus of her piece was on the archaic pricing structure in our markets where stocks are traded using fractions of a dollar instead of dollars and cents. It dates back to the Spanish coins in colonial days which were divided into eight "bits." But the arguments for going away from this system to one that actually makes sense for those of us who've closed the calendar on the 18th and 19th centuries is that it would be too expensive to change over to a decimal system and that the market makers, the middlemen, would lose too much money. As Ms. O'Connell's article points out, it's not so, and the real important factor is that switching to decimal pricing would narrow the spreads between the bid and the ask and save the individual investor a penny or more per share per trade. It doesn't sound like much until you realize that equates to more than $1.5 billion a year (based on last year's trading). So, guess who's fighting it? Of course. Those who profit from the spread. In one of the most fallacious arguments I've heard for anything since I stopped teaching freshman writing, E.E. "Buzzy" Geduld, president of Herzog Heine Geduld (the largest wholesale market maker), theorized, "Communism sounded good too, until it became real." Helpful, huh? But if the experience in Canada is any guide (the Toronto exchange switched to decimal pricing in April), such a switch would save individual investors a fortune, and because of increased trading volume, the market makers would still make their share. How Foolish! Don't look for it anytime soon, though. It makes too much sense (or cents).
Today's Dow Numbers Stock Change Bid ------------------- DD + 1/8 92.75 CHV - 1/4 67.00 MMM + 1/2 83.38 EK -1 1/4 82.50 IMN - 3/4 30.75
Day Month Year History
FOOL-4 -0.30% 3.56% 31.01% 31.01%
DJIA -0.18% 6.45% 25.43% 25.43%
S&P 500 -0.16% 5.31% 20.59% 20.59%
NASDAQ -0.54% 2.99% 19.57% 19.57%
Rec'd # Security In At Now Change
1/2/96 142 DuPont 69.88 92.75 32.74%
1/2/96 149 3M 63.76 83.38 30.77%
1/2/96 380 Chevron 52.38 67.00 27.92%
1/2/96 148 E. Kodak 67.00 82.50 23.13%
7/16/96 14 Imation 26.16 30.75 17.56%
Rec'd # Security In At Value Change
1/2/96 380 Chevron 19902.50 25460.00 $5557.50
1/2/96 142 DuPont 9922.25 13170.50 $3248.25
1/2/96 149 3M 9500.09 12422.88 $2922.79
1/2/96 148 E. Kodak 9916.00 12210.00 $2294.00
7/16/96 14 Imation 366.21 430.50 $64.29
CASH $1810.64
TOTAL $65504.52
Transmitted: 11/21/96
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