Money Angles Miracle on Wall Street!

By Andrew Tobias

It's beginning to look as if the stock market is at record highs for good reason. Uh-oh. Perversely, the market tends to perform best when people are scared and worst when things are finally beginning to look rosy. But consider the temptations:

The cold war is over, and we are the world's only superpower.

It no longer looks as if we will all be working for the Japanese.

Peace is breaking out in the Middle East.

Oil prices are low.

South Africa's black and white leaders have jointly won the Nobel Peace Prize. (And those South African bonds I suggested here in May -- up 25% -- still yield 15%.)

Interest rates are wonderfully low.

Balance sheets are growing stronger.

Economic growth is real, but slow enough not to rekindle inflation.

Trade is becoming freer -- surely Congress will eventually pass NAFTA, as Presidents Clinton, Bush, Reagan, Carter, Ford and Nixon have all, in a remarkable display of bipartisan good sense, been urging it to do.

Free enterprise is beginning to take hold in Russia and, more impressively, in China.

Technology races ahead -- laser surgery, CD-ROM encyclopedias, fat-free cheese. It is, in short, an extraordinary time to be alive.

Which brings me to perhaps the most amazing development of all (although I really can't get over this cheese; it looks and tastes just like the regular kind): commission-free stock trading. As if all this other great stuff weren't reason enough to plop down your hard-earned bucks for shares of Snapple, up fivefold in the past 10 months, or Callaway Golf, up fourfold, now there are several ways to play the game on the supercheap. Stocks have become expensive, but the cost of buying them has come way down. It's kind of like the free helicopter to the airport Pan Am used to provide when you bought a $4,000 first-class ticket. A bargain!

Olde Discount Stockbrokers (800-USA-OLDE) offers free trading of any listed common stock. You have to have an account worth at least $500,000 to qualify; but if you do, there's no commission to pay. Zero! (How does Olde do it? By charging commissions on all the other trades you do -- such as bonds, options and over-the-counter trades. And by lending money to you on margin, loaning your securities out to short sellers, and perhaps even selling you an annuity or life-insurance policy one day.)

Nor must you have $500,000 to get in on the fun.

Accutrade (800-882-4887) charges just 3 cents a share with a $48 minimum. So you could buy 1,600 shares of IBM for just a $48 commission. The same trade at a traditional discounter would cost about $230. At Merrill Lynch: $750. (Except that at most full-service brokers, all you have to do to get a break on the commission is ask. A really active account may get 50% or 60% or even more off the official rates.) I like Accutrade because you can punch in orders or get quotes 24 hours a day by Touch-Tone phone or, more elegantly, from a home computer. (If you have Windows, Accutrade's free "plus term" utility makes your on-line sessions painless.)

Smaller traders may prefer a discounter with a lower minimum commission. For example, Kennedy, Cabot & Co. (800-252-0090) -- which is not remotely the old- line Massachusetts firm its name conjures up -- charges just $20 on "odd lot" trades (fewer than 100 shares) and as little as a penny a share commission on stocks selling for under a buck.

But of course all this is madness. America's future is bright (if we can only teach Johnny to read, and get him to stop carrying that gun), but that doesn't mean the stock market will keep going up. Stocks may have reached "a permanently high plateau," to borrow Professor Irving Fisher's famous phrase from 1929, but that wasn't true when he uttered it, and it's probably not true now -- although this is certainly not 1929.

What's more, if you are going to get into the market -- and over the really long pull, that's the place to be, even if prices are too high now -- it almost surely makes more sense to do so through one or more no-load (no sales commission) mutual funds than to try to pick the stocks yourself.

The good news on the no-load front is that there are more than ever to choose from. And that you can now buy many of them through discount brokers. Charles Schwab & Co. (800-435-4000) pioneered this convenient notion, and many other discounters have followed. It saves having to call or write for a fund application, cuts paperwork by consolidating all your funds in one statement, and makes selling or switching funds a lot easier. The only drawback is a small service charge -- but Schwab waives it on 200 of the 600 funds it trades, as do such others as Fidelity (800-544-7272), Jack White (800-233-3411) and Muriel Siebert (800-872-0711).

Of course, if the market tumbles, mutual funds will tumble right along with it -- with the ones that have gained the most recently very often tumbling the furthest. Economist David Bostian headlines his most recent pronouncement: STOCK MARKET HAS REACHED ITS OVERVALUATION "RED LINE" FOR FIRST TIME IN 20 YEARS. I was around in 1973: it wasn't pretty.

So it's like this. Shipping and handling fees have been slashed on Wall Street. Only the merchandise has been marked up. One day, there will be a sale.