You could almost hear the collective lip smacking of traditional brokers in recent weeks when the Dow Industrial Average tumbled back down towards 10,000. Traditional brokers have repeatedly claimed that a bull market has made Internet investors look smart these past few years, and that buying and trading online has been easy because there have not been many tough investment decisions to make.

The threat of a bear market calls into question the wisdom of mutual fund companies pumping as much money as they have been into e-commerce. Most of the advances of the Internet have come during one of the greatest bull markets of all time. What if that prosperity was to disappear? Would people still buy and sell their mutual funds online?

Many people, even those who run Internet-based financial services businesses, agree that transactions will go down during a bear market. However, those same people believe that those who use the Internet to manage their finances now probably will not turn to traditional brokers if they have not already.

Some people will need some hand-holding by a traditional broker during a bear market, but most Internet traders will stick with their online accounts, according to Alexander Cheung, portfolio manager of the Monument Internet Fund of Bethesda, Md.

"Most people that use the Internet for trading today, also are not likely to have all of their money in Internet accounts anyway," Cheung said.

The Internet is most powerful in its ability to give investors information and a bear market will not change the ability for people to gain insight into the market, Cheung said.

"(A bear market) is not going to affect the use of the Internet," he said.

If anything, a bear market will force people online since the transaction costs are cheaper, and people can save money that way, Cheung said.

Brian Ratzliff, a vice president of marketing for Netstock Direct, a company in Bellevue, Wash. that offers mutual funds through its web site direct to investors, also believes that online trading will survive a bear market.

"I don't think that people will abandon the Internet or the online broker," Ratzliff said.

Online brokerages have already made moves to diversify their businesses, Ratzliff said. He points to Charles Schwab of San Francisco and E*Trade of Menlo Park, Calif. as examples. E*Trade recently bought an online bank, Telebanc, as a means of offering banking services, and Schwab is starting to provide more financial planning, he said. This diversification is a means of ensuring that these businesses survive if transaction revenues decline.

"I think the Internet will still be around," Ratzliff said. "The focus might just not be on trading."

Of course not all hand-holding needs to be done in a broker's office.

Scott Lummer, chief investment officer of the 401(k) Forum of San Francisco, believes that the Internet will actually help people survive a bear market. The 401(k) Forum provides 401(k) participants with online advice on how to manage their retirement accounts.

When the market dropped over 200 points in one day this fall, his company sent out e-mails to all of its customers, telling them not to be scared by the setback, Lummer said.

"That's when we really earn our pay (during a bear market)," Lummer said. "That's when we really go into overdrive."

Some people will need hand-holding by live brokers when a bear market hits, Lummer said. But, the Internet enables his company to provide advice to more people than live brokers can at critical times when investors are most anxious to obtain advice, he said.

Many people now develop trusting relationships with people online, including relationships with investment advisors, Lummer said.

"I think we're clever enough on how we communicate with participants (to gain people's trust)," Lummer said.

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