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Non-Tech : E*Trade (NYSE:ET) -- Ignore unavailable to you. Want to Upgrade?

To: eDollar.com who wrote (13244)	4/21/2000 2:27:00 PM
From: ecommerceman	Read Replies (3) \| Respond to of 13953

Well, here's another stupid analyst report to forget, as far as I'm concerned... Schwab Emerges From Online Broker Jungle By Caroline Humer, Senior Writer, TheStreet.com 04/21/00 10:38 AM ET The lights have been off at the online brokerage stock party for the past two months. Now the much-anticipated after-party is looking dim, too. Investors' only hope may be to grab some Charles Schwab (SCH:NYSE - news - boards) and hold tight. After a record quarter of trading numbers, some analysts expect Nasdaq trading volumes -- and thus, trading commissions -- to decline by about 15% this quarter before heading into the summer doldrums. Meanwhile, ballooning margin debt has many observers questioning if investors will react to a down market by borrowing less. That, too, will hit online brokerages' bottom lines because they earn interest on the money they lend investors to buy stocks. The difference with Schwab, observers say, is that the company earns revenue from many different sources and therefore isn't as reliant on online trading activity as most of its competitors. Those two factors explain why the stocks of more trading-dependent cyberbrokers such as Ameritrade (AMTD:Nasdaq - news - boards) and ETrade (EGRP:Nasdaq - news - boards) have fared worse than that of Charles Schwab (SCH:NYSE - news - boards). The less a broker depends on Nasdaq volume for commission revenue, the less its stock is knocked down by a market decline. While Schwab fell 5% since March 1, Ameritrade and ETrade gave up 24% and 23%, respectively. Charles Schwab Outpaces Nasdaq 100 ETrade, Ameritrade On Decline Falling into the same camp as Schwab in terms of having both "clicks and bricks" is TD Waterhouse (TWE:NYSE - news - boards), the online unit of Canada's Toronto-Dominion (TD:NYSE ADR - news - boards). It's given up less than 1%, but unlike Schwab, the stock hasn't been much of an investment. Its 52-week high is only 27 1/4, compared with Schwab's 67 1/8, and it's now trading below its initial public offering price. Schwab, which had more than $800 billion in assets at the end of the first quarter, recently bought U.S. Trust, a high-end investment services company that adds revenue from businesses such as trust services to Schwab's bottom line. Also, about one-third of Schwab's assets are managed through its financial advisers, and their clients are unlikely to make wild bets that could cause them to suddenly liquidate their positions. Then there's Schwab's mutual fund business -- each of the companies that takes part in it pays the broker a fee. During the most recent quarter, that amounted to about 15% of revenue. And while other online brokers such as ETrade have plowed a fat percentage of revenue into marketing, thereby erasing profits, the more established Schwab has the financial heft to spend big but still churn out profits. Here's a look at the declines in stock price among some of those smaller brokerages that are pure online plays. DLJDirect (DIR:NYSE - news - boards), the tracking stock for the online brokerage unit of Donaldson Lufkin & Jenrette (DLJ:NYSE - news - boards), is down 20%. National Discount Brokers (NDB:NYSE - news - boards), the parent company for ndb.com, saw its stock nearly double during the first half of March before starting a decline that has it down 35% since March 1. Tiny Wit Capital (WITC:Nasdaq - news - boards), which runs an investment bank and an online broker, is no exception. Its loss: 35%. Finally, there's another group of online brokerages that daytraders love but which investors don't because they are so small. Web Street Securities' (WEBS:Nasdaq - news - boards), for instance, has just $800 million in customer accounts. Web Street's stock is off 26%. Another small player, JB Oxford (JBOH:Nasdaq - news - boards), is down 35%. "I think the other online brokers have been financed by the markets and they have not proven yet that their business method is working -- that they're generating a sufficient return on their capital," says Jeff Van Harte, manager of the Transamerica Premier Equity fund, which is long Schwab. Seems that's the party line among investors

To: eDollar.com who wrote (13244)	4/21/2000 4:57:00 PM
From: Scott Moore	Read Replies (1) \| Respond to of 13953

I see misplaced logic in all of your statements except for one. That one is record ad spending. Day traders always come and go. Those that leave will have more than one take their place. Why would interest rate increases hurt ebrokers more than other brokers? My 70 yr old mom is moving funds from a traditional broker to an ebroker to save on commissions. I can guarantee you she will never use margin. If you got wiped out in four accounts, does that mean you will stop trading? Of course not, you still have some left over profits to mess around with. People that lose a little bit of money feel very anxious. Those who lose a whole bunch feel numb, because it is over their threshold of pain to comprehend. I've seen this phenomenon time and again at Vegas. Taking on-line trading away from some traders will be like trying to take a bottle of Jack Daniels away from an alcoholic. My average price is in the low 20's here. If I ever feel like I should sell in a declining market, I first remind myself why I bought that stock to begin with and then remind myself that I am selling because I think I can buy those same shares back at a cheaper price. Otherwise, why did I take a risk in the first place. Now, for those who did buy in above $30, your perception of pain may be correct if they only bought EGRP. But, if they have diversified like most folks do, then that pain is buffered by last years gains. My logic tells me that the 15% figure of on-line account accounts now will grow to at least 75% in the next five year due to the influx of computer literate young folks like Stuart teaching the ole fuddies like Mr. P (Ameritrade commercial) how simple it is. I think I'll go make a photo copy of my face right now for tonight's party flyer. Regards Scott