THE WALL STREET REVOLUTION.

Byline: Yardena Arar and Dawn Yoshitake Daily News Staff Writers

For three years, Kevin Furr watched his retirement savings go next to nowhere in a mutual fund. Then the Navy jet navigator discovered The Motley Fool, an America Online investment club.

Within a few weeks, Furr, who'd never bought a share of stock in his life, had taken charge of his own IRA. Less than nine months later, he'd more than doubled his nest egg, learning a lot about securities markets in the process.

"Since I fired my mutual fund managers, I've done much better than they ever did," said Furr, who hooks up to AOL from his home in Coronado.

He is among a growing group of new and experienced investors who are turning to the Internet and on-line services to trade, learn and generally shmooze about stocks and other securities. Exchanging their own research and analysis about issues such as Iomega Corp. - the top-performing over-the-counter stock of 1995 - these proverbial "little guys" are acquiring genuine market muscle in a quiet revolution that is attracting attention of the financial community, publicly held companies and regulators.

Furr and others discovered Iomega, a struggling company that developed low-cost, easy-to-use computer data storage hardware, months before Wall Street took notice.

They posted more than 14,000 thousand messages, catching the stock at $7 and riding it up at one point past $53. Investors pored over balance sheets, took apart Iomega's memory drives to examine the innards and prowled their local computer stores to check on sales. Together they produced research richer than any report from a brokerage analyst.

Iomega is a dramatic example of how small investors can work together. But however they exploit the resources available in cyberspace, it's clear that more and more of them are going on-line.

The National Association of Investors Corp., a Michigan-based organization for individual investors, found 20 percent of its 360,000 members used a computer to track their investments last year, chief executive Ken Janke said.

Although figures were not available on how many of those investors used the Internet and/or commercial online services, Janke said the number was significant and growing.

"The Internet has revolutionized the ease and speed of getting information," Janke said. "Our members are now able to download information much quicker than in the past. Before, they'd have to photocopy Value Line (a weekly publication featuring reports about various companies and stocks) at the library, or call a broker."

Personal finance is a major draw for all the commercial on-line services. America Online, which is adding 60,000 subscribers a month, said The Motley Fool is one of its top 10 sites.

Charles Epstein, moderator of Prodigy's Money Talk forum, said as many as 35,000 subscribers check in each month.

"It's a truly democratic new medium for investing," said Epstein, whose bimonthly newsletter, Investing Online, reports on news and trends in the field.

"More people are being exposed to higher levels of financial information than ever before. You can get institutional-quality information - the key is how to use it."

Furr first heard of Iomega early last year in Barron's. The Roy, Utah-based computer peripherals manufacturer was introducing its $199 Zip Drive - a device that records up to 100 megabytes of information on removable discs only slightly bigger than conventional floppies.

But shortly thereafter, he ran across the very first message board entries about the company on The Motley Fool, which in addition to the advice and daily newsletter of authors Thomas and David Gardner has folders for stocks that members want to discuss.

Furr liked what he read about the Zip Drive's potential as a data storage device and the early indications of the huge market for such a product. "I clearly remember reading that it was back-ordered 30,000 units before it was introduced," he said.

Furr not only bought about 150 shares at $7 a share, he became a regular contributor to the Iomega message board. He had plenty of company. Soon the first Iomega folder had reached its capacity of about 500 messages and a new one was started. By mid-January, the Motley Fool was into its 32nd Iomega folder, and the stock price was hovering in the mid-$40 range.

A look at some of the Iomega folders still available on The Motley Fool - there's a "graveyard" containing folders dating back to September - gives the impression of a noisy, contentious but lively and, for the most part, bullish bunch.

Content ranges from questions by newcomers to expert analysis to speculation to market research from contributors scattered all over the country.

"These guys were putting together the most sophisticated analysis of the company I'd ever seen," said Jeff Wiener, a Los Angeles entertainment industry analyst who stumbled onto the Iomega boards in May.

"They were taking apart Zip Drives to see what the components were, they were talking about the company's competitive advantage, they figured out the profit margins. . . . And then people all across the country started going to their local retail stores. You started getting five, six, seven posts a day from everywhere - you name the city."

Based on what he read, Wiener not only bought Iomega for himself but recommended the stock to friends who bought in at about 14-1/2. "These guys have made a lot of people a lot of money," he said.

Benjamin Lipman, a junior at Columbia University, is a moderator on the Iomega board.

"The information available on The Motley Fool is as good or better than what the institutions have on Iomega," Lipman said. "We essentially have thousands of Fools (the euphemism for the Gardners and their followers) who post and can go to stores and do market research.

"You also have the analysis of thousands of people that over months kind of becomes a cohesive whole. . . . We've been pretty accurate. The third quarter was the real test. I had an earnings estimate of 9 cents on revenues of $85 million, and they came out with 10 cents on revenues of $84 million."

Charles Park, an MIT graduate student whose online moniker is MF Chiros (the MF, for Motley Fool, denotes a moderator), has been investing since he was 14 and views The Motley Fool and on-line services in general as a good alternative to traditional sources of information available to small investors.

"The common experience of the individual investor is that a broker comes to you with something, they tell you about it and you invest. The problem with this, I realized about two years ago, is that brokers are salespeople by nature. Their incentive is in generating commissions. . . . They push a product called stocks, and oftentimes they don't know what's going on."

Park turned to discount brokers, which reduced his commissions but left him with no information. Then, like Furr, he discovered the Iomega message board on The Motley Fool.

"Back then, it was very quiet. . . . We just discussed what we thought the prospects would be. Whenever something appeared in the newspaper, we would post it. We tried to piece together information."

The on-line community's Iomega windfall was made possible in part by Wall Street's general indifference. Even now, only three firms have analysts tracking Iomega: Emerald, H.D. Brous and Red Chip Review.

"Iomega has been easily the most talked-about stock on the on-line services," said Joe Besecker of Emerald Research, the research arm of Emerald Asset Investment of Lancaster, Pa.

"Their product is geared to people who like and use computers - the same people who tend to congregate on-line."

In contrast, Besecker said, "Wall Street still, to some extent, believes that this (Zip drive) is a flash in the pan. They've been burned in the past by new hot technologies.

"The other thing that made this company so intriguing to on-line services is that the company has been very close to the vest with their information."

The lack of public information has left the door open for all sorts of speculation and misinformation, which even on-line investment enthusiasts acknowledge to be the major danger of basing financial decisions on information garnered in cyberspace.

In one celebrated incident of Iomega-Motley Fool lore, someone posted a purported Reuters article that turned out to be a fake. Another brouhaha erupted when a contributor identified as Cyberlane claimed to have visited Iomega's plant and posted production figures that company officials eventually disputed.

William O'Neil, founder of Investor's Business Daily, said new investors may not know enough to profit from the information available on-line.

"Two to 5 percent of investors study the craft. The rest base their strategy on tips and rumors," said O'Neil, who added that even fewer investors use computers to do research.

Those who do may not necessarily be acquiring useful information, he added.

"The is key to successful investing is not to get a lot more information. The key is to get the bits of information that will be relevant," O'Neil said. "The answer is to concentrate on such things as earnings growth and improving industry conditions."

Nonetheless, Investor's Business Daily several months ago rolled out a World Wide Web site with news and market information plus a personal portfolio tracker.

The newspaper also operates a stock bulletin board on America Online.

"There's a lot of valuable information on it, but it's not the same as reading books or taking an investment course," O'Neil said.

Another potential problem is the herd syndrome. On a board heavily populated with bulls, a bear is likely to be seriously flamed.

One Iomega contributor who posted his belief that the stock is headed for a fall said he was accused of trying to manipulate the price for his own profit. The Iomega bear, who agreed to be interviewed on condition that he not be identified, said he made no secret that he was selling Iomega short and would profit if the stock price fell. But, he said, "I'm not trying to manipulate the stock."

The experience has made him somewhat leery of on-line investment groups.

"In theory, it's a great way for a number of individual investors to pool their information that would allow them to make rational decisions," he said. But in the case of Iomega, "the sheer volume of these messages, they build upon each other almost in a frenzy, and they come up with expectations that are almost impossible."

The heated dispute over the bear's projections will be settled toward the end of January, when the company - which is in a quiet period preceding its secondary stock offering - will publish its fourth-quarter figures.

But even Iomega bulls acknowledge that the system is open to abuse.

"It's a matter of common sense," Furr said. "If you walk down the street and you meet some people and they say something to you, you don't know whether they're telling the truth or not."

"Because of the anonymity guaranteed by AOL, people can walk in and just spout off whatever they want to say," Park said. "You kind of have to know who to trust. If you take everything on there at face value, you're going to get burned."

RESOURCES FOR ON-LINE INVESTORS AMERICA ONLINE

Investors Network (keyword INVESTORS)

The Motley Fool (keyword FOOL)

RODIGY

Money Talk (jump: MONEY TALK)

COMPUSERVE

Investors' Forum (GO INVFORUM)

Dun & Bradstreet's Electronic Business Director (GO DUNSEBD)

INTERNET

EDGAR (Electronic Data Gathering, Analysis, and Retrieval) Database. SEC filings, but on a 24-hour delay. (http://www.sec.gov/edgarhp.htm). Real-time filings are only available on line from several companies that charge for access: Bloomberg Financial Markets, Disclosure Inc., Factset Data Systems, Federal Filings, Indepth Data, Internet Financial Network, Lexis/Nexis (the official SEC re-seller) and Standard & Poors.

Investor Intouch. (http://www.money.com)

Investors Advantage. (http://www.shares.com)

InvestorWEB. (http://www.investorweb.com)

PAWWS Financial Network. (http://pawws.com)

USENET FAQ (frequently asked questions) sheet. (http://www.cis.ohio-state.e du/hypertext/faq/bngusenet/misc/invest/top.html)

Investing Online. Newsletter published by Charles Epstein, moderator of Prodigy's Money Talk bulletin board. $75 for 11 issues a year. Investing Online Publications, Suite 182, 1001 Green Bay Road, Winnetka, Ill. 60093. [phone].

The Individual Investor's Guide to Computerized Investing, 13th edition, 1996. $24.95. Published by the American Association of Individual Investors, 625 North Michigan Avenue, Chicago, Ill. 60611-3110.

CAPTION(S):

DRAWING[ordinal indicator, masculine]PHOTO[ordinal indicator, masculine]CHART

Photo (1) Kevin Furr of Coronado swears by The Motley Fool on-line investment group, through which he and others profited by Iomega Corp. Myung J. Chun/Daily News (2) David, bottom, and Thomas Gardner provide advice, a daily newsletter and stock folders in The Motley Fool site on America Online. Drawing/Chart No caption--Color (Iomega Corp.'s stock range superimposed on a computer Perry Perez/Daily News Box RESOURCES FOR ON-LINE INVESTORS (See text)