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Strategies & Market Trends : A.I.M Users Group Bulletin Board -- Ignore unavailable to you. Want to Upgrade?

To: steve in socal who wrote (8028)	7/29/1999 4:20:00 PM
From: JZGalt	Read Replies (1) \| Respond to of 18928

Steve, I think full service brokers are toast. The exception may be full service financial services where credit card, mortgage, banking, investing, insurance are all bundled under one roof and the fees are considerably cheaper. The way they keep expanding is $$'s under management. With the market acting like it has in the last 5 years, obviously that has expanded and the full service brokerage firms tend to generate fees based on assets moved around. Consequently.... In any case, the ultimate might not be the online brokers, as they might get squeezed with ECN's that are coming up. Part of the Disruptive Influences conferences dealt with this question. One soundbite was "Merrill Lynch's cost is 6 cents per share traded. Datek's cost is 6/100 of a cent.". I believe that is accurate, but at least the gist is accurate. What you might see is the off loading of this backroom stuff to more efficient players. Bank of New York is a name bandied around and there are some rumors of Chase Manhattan linking up and forming their own ECN's to compete with Island and others. NITE comes to mind in this area also. I think that owning or using a full service brokerage is silly unless you are getting value for your transactions, but I don't think the picture is all that rosy for the online brokers either as things get squeezed. It might take a while for that to happen however. Quite a bit of the world isn't anywhere near where we are. ---- Dave (some of my best friends are better than analysts) <grin>

To: steve in socal who wrote (8028)	7/29/1999 4:38:00 PM
From: OldAIMGuy	Read Replies (1) \| Respond to of 18928

Hi Steve, I noted this AM that Waterhouse just past the 2 million active account mark. That's a whole lot of folks! Have they moved all their money there yet? Probably not, but cash seems to be flowing in the way you've suggested. Institutions trade with the big houses and have deals to keep commissions very low. That and their "investment banking" business keep them going. If you look at the percent of revenues that comes from "retail" at the big houses, it's usually about 50% sometimes less. At a place like Waterhouse, it's more like 85%. What makes the "retail" brokerage stocks interesting to us AIMers is that when they fall, they fall like a scorched phoenix and smell worse than burnt turkey feathers. But then the world DOESN'T come to an end and they shoot back up like a shuttle launch from Cape Ken.... ah, er.... Canaveral. The big brokers are less volatile because of the lower percent of business that comes from the retail sector. So, the retailers are better AIM stocks generally. As AIM accounts they need FAT cash reserves, however. I generally use the IW's stock setting for them. Currently I own just one brokerage/investment banker - Hambrecht & Quist (HQ). That account is up 48% in just under one year. Cash reserve is currently about 41% of the total value. I've been considering starting another one with Waterhouse's stock now that it's off about 25% from its IPO price. Don't know what I'll do yet. SCH has been a great performer and would have given decent AIM performance as well. A "what if" example I've tracked in Newport since 1994 shows a 348% total return since then. Lots of "vealies" used along the way, too. Best regards, Tom