Wired For Profit

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A moment of sympathy, please, for the small investor. He is always the last to know what's going on -- and the least likely to profit from it.

Consider, for example, the investor who was thinking about taking a flier on Dreyfus Corp. last fall. When the financial wires reported stronger-than-expected earnings and an extra dividend for the company in October, the stock price began a strong surge, rising 20% in just two days. But unless he had a ticker of his own, the small investor read the news in his evening paper -- and by that time the share price had risen by 7 3/4, and professional traders were already taking their profits.

Wall Street professionals, who closely follow the wires, are often able to buy stocks ahead of major advances and sell ahead of major declines, because they have immediate access to the news. Smaller investors, without the same access to information, are denied those opportunities.

Enter Raymond Kytle of Mount Pleasant, Mich. Kytle has formed a new company called News/Break Advisory Services Inc. to protect small investors by keeping a close watch on late-breaking financial news affecting them. While there have long been advisory service hotlines, and although a Dow Jones & Co. subsidiary has just introduced Dow Alert, an FM radio subcarrier signal to alert investors to market news (see INC., November 1982, page 155), Kytle has added a personal touch.

Kytle's company watches the financial news wires minute by minute and then telephones his clients. "When news breaks we'll call the small investor," he promises. "We provide equal access and insurance against unpleasant surprises."

"We're out to end the double standard that discriminates against the average investor," says Kytle, a tenured English professor at Central Michigan University and an active small investor for almost two decades. "That double standard allows a privileged few to profit from news hot off the ticker, while the rest of us read about it a day or two later in the newspaper," he says. Because of thc domination of the large institutional investors, the market has become increasingly volatile. Kytle's service lets the small investors compete.

News/Break Advisory offers two basic options: an earnings alert, which concentrates only on earnings reports and forecasts, and a more comprehensive service offering a wider range of financial news. In the earnings alert service, for a flat monthly fee of $5, the company will notify small investors immediately of earnings forecasts by corporate officers and quarterly earnings reports. The comprehensive service, at a flat rate of $8 per month, includes the earnings news plus reports on stock splits, mergers, major contract awards, rate-increase approvals or denials for publicly regulated companies, airline traffic and load factor announcements, major litigation settlements, dividend changes, backlog announcements, sales figure announcements, and new agreements on product licensing. There is no charge on either service if the company fails to reach an investor within 25 minutes of when the news item clears the Dow Jones News Service wire.

Kytle operates with three full-time employees, bringing in temporary workers to handle telephone calls during the predictably busy weeks when most companies issue quarterly earnings reports. His customer base currently numbers in the hundreds, Kytle says, "and we're growing rapidly."

"For me, it's the classic mid-life change to an entrepreneurial venture," says Kytle, who is also the author of three published novels. "I decided to go ahead with this after running into situations almost weekly where I felt at a severe disadvantage as a small investor because I was in the dark."

Kytle admits to encountering some problems trying to market his new service. Small display ads in such business publications as The Wall Street Journai and Barron's failed to bring much resuIt. "We're having more success now with a direct-mail campaign, but even there we've had difficuIty in getting good mailing lists," he says.

His operation has also attracted the attention of at least one large business wire service, Dow Jones. "I think they'd like to drive us out of business," Kytle says "But really we're no threat to them at all. We're reaching people who would not be their subscribers in any case."

A Dow Jones spokesperson would only say, "It's basically a contract dispute. We're not going to discuss it before it is resolved."