New smartphone app makes it easier to shop for stocks

— -- A new smartphone app is going to make it a lot easier for investors who follow the advice of "buy what you know." But some question whether the tool is telling them what they really need to know.

TD Ameritrade, a leading brokerage firm, today will add a new function to its mobile app allowing investors to scan UPC bar codes on any product and instantly see what company makes it, get stock information about that company and buy the stock on their smartphone. It will launch first on iPhone and iPad, and soon after, on devices running the Android operating system that have a camera.

The technology aims to bring Wall Street trading data to individual investors when they're at retail stores, when some do their research. For instance, an investor who noticed a consumer product that's nearly out of stock or selling well at a retail store could scan the item, see who makes it and place a trade without ever sitting in front of a computer.

Some of the best-performing stocks are companies that make "products that people on Main Street consume every day," says Nicole Sherrod of TD Ameritrade.

The move comes as more online brokerages roll out features to appeal to investors who use their smartphones to conduct trades.

Online brokerages garner much of their revenue from trading commissions when investors buy and sell. Mobile trading, which still only accounts for less than 10% of trades at TD Ameritrade, is one of the fastest growth markets as more people use mobile devices to conduct personal business, says TD Ameritrade's Steve Quirk.

"It's a growing percentage," says Patrick O'Shaughnessy of Raymond James. "They're taking (mobile trading) more seriously." It's an interesting tool that could appeal to investors, says David Lo of J.D. Power & Associates.

Yet some aren't so sure the additional information is truly valuable to investors. Portfolios should be broadly diversified and crafted so risk matches each individual investor's appetite for risk, says Mark Hebner of Index Funds Advisors.

Any business trends consumers might notice in the stores are already reflected in the stock's price if not already described in research by Wall Street analysts, he says. Even professional mutual fund managers, who have resources to do in-depth "channel checks" by examining consumer trends, fail to beat the stock market on a consistent basis, he says.

"Any information important about the product is already embedded in the stock price," he says. "Trading is dangerous to your wealth. But, the industry will do anything to get you to trade."