Friday, April 01, 2005

Travel bug is best sign of Merrill's good health

Travel bug is best sign of Merrill's good health

Merrill is not flopping around like Morgan Stanley. A few years ago, the firm took the small accounts ($100,000 or less) and moved them to a call center. This freed brokers to spend their time in more cost effective pursuits. Many clients split their accounts anyway. Merrill is better off is some get mad and leave and if others consolidate to "qualify" for a "real" broker.

The strategy is not unlike the successful strategy of Best Buy. Best Buy works hard to run off the "bad customers". My wife and I once took advantage of "free credit" at Best Buy. At the end of the free period, we paid for the merchandise in full and paid zero interest. The next thing we knew, our Best Buy card limit was reduced to zero. Clearly Best Buy makes a significant part of its revenues by charging high interest rates to the willing.

For the past few months, about the only stocks to do well are energy related. Financial, pharma, retailer, tech and others all seem to be suffering. The market is wearing the traders out. The action this week most likely heightened the frustrations of many. The strong up-move took the profits away from the bears who were piling on but then faded the next couple of days to take the profits from the bulls. Patient investors should buy, buy, buy and hold on tight. Good news is coming!