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Non-Tech : TD Waterhouse Group (TWE)
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To: Jeremy G. Browning who wrote (1182)4/14/2000 10:37:00 AM
From: Proton  Read Replies (2) of 1413
 
Re: Brokers Not Just Caught in the Web

I guess the word WEB puts web-brokers in the Internet sector. That's the only reason I can guess that there is so little interest in them. I thought when solid earnings started coming out that the sector would heat up. This is very bad for web-broker investors. TWE announces an alliance, gets upgrades and the sector as a whole posting great earnings. If that can't lift the sector then what's it going to take?

Announced earnings look backwards. The environment that created those profits no longer exists. Customer balances are down. New accounts are drying up. Most importantly, margin buying (and the tremendous profits margin interest provides) has imploded.

Is all this permanent? Right now, it doesn't matter. Investors always assume trends will continue into the future, so the picture for online brokers looks bleak.

Margin buying may never return to the levels we saw in the first quarter. Refer to Mark Twain's quote about cats, hot stoves, and cold stoves.

It appears that the recent incompetence and arrogance of online brokers was one sign of an impending market top. Waterhouse may not need all those freshly minted customer service reps, after all.

Regards and good luck,
P.
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