November 4, 1999 7:06 PM
Online Brokers Soar as Trading Volumes Heat Up
By Megan E. Lundin
E TRADE GROUP
EGRP 31.38
5.19 19.82%
AMERITRADE HOLDING'A'
AMTD 19.06
2.31 13.79%
NATL DISCOUNT BROKERS GRP
NDB 29.00
4.38 17.78%
DLJ DIRECT
DIR 16.25
1.63 11.14%
SCHWAB (CHARLES) CORP
SCH 42.00
3.50 9.09%
DJIA
10639.64 30.58
Nasdaq
3055.95 27.44
Rus. 2000
439.90 1.44
11/4/1999 4:42PM ET
THE ONLINE BROKERS soared today on reports that the much-feared slump in online-trading volume was apparently temporary. E*Trade Group (EGRP) got a cool 19.8% boost, AmeriTrade Holding (AMTD) jumped 13.8%, National Discount Brokers Group (NDB) enjoyed a 13.7% hike, DLJdirect (DIR) was up 9.4% and Charles Schwab (SCH) closed up 6.17%.
Those stocks took a beating only a few weeks ago, after the average number of online trades per day dropped 7.8% in the third quarter from the second quarter, while overall trading volume on the New York Stock Exchange and the Nasdaq dropped 2%. Industry analysts predicted that the extremely high trading volumes of April were a thing of the past, never to be seen again.
Instead, as two analysts' reports point out today, overall trading levels jumped 10.7% in October ? making it the second-best month in market history. And now analysts are praising the bright future of the online-brokerage industry as trading levels continue to surge in the beginning of November. The improved trading volume so far in the fourth quarter should spell better revenue and earnings for the online-brokerage firms, says Tim Butler, an analyst at Pacific Crest Securities.
A report released today by the Securities Industry Association also made the online brokers' prospects look particularly rosy ? and lent a kick to their stocks. Based on a survey by Yankelovich Partners, the report says that the proportion of investors who have used the Internet to trade securities nearly doubled over the past year to about one in five.
According to the Yankelovich poll, 18% of respondents polled between Aug. 25 and Oct. 10 said they used the Internet to buy or sell stocks, bonds, mutual funds or other investments. That compares with just 10% of respondents who said they had traded securities online in 1998. The SIA commissioned Yankelovich to interview 1,507 investors with total household income of more than $50,000 and financial assets (excluding their home) of more than $100,000.
Fifty-nine percent said they have at least one account with a brokerage firm; 46% have an account with a full-service brokerage firm; 18% have an account with a discount broker; and 11% have an account with an online broker.
The survey underlines previous findings that investors who have used the Internet to trade tend to be younger, more aggressive and wealthier than their counterparts who place trades through a broker. The average online investor has a median household income of $86,200 and financial assets of $219,200. Sixty-two percent of online investors are younger than 50, and 46% have placed a trade within the past month. |
