Friday, September 16, 2005


Morgan Stanley has joined Merrill in packing up the little guys accounts and sending them to a call center. Only the wealthy can talk to a "real" broker.

The approach is understandable. Highly commissioned brokers need to deal with big accounts to make a living for themselves and for the firm. Never-the-less, the "little guys" feel dumped upon. Why deal with a "clerk" at a call center and pay more than the online costs to trade with SCH, AMTD or ET.

When the market breaks out of the long trading range, the trades per day for discounters should go out the roof. These stocks have done well but in the same way that it is foolish to pay for long-distance calls today, it is foolish to pay for full service brokerage services. AMTD is still my favorite but ETis not far behind. These are not cheap stocks but the growth is excellent. Fellow blogger David Jackson's on agrees that Ameritrade’s merger with TD Waterhouse might strengthen competition (particularly price competition) in the middle segment of the market with the outcome being beneficial to Schwab as well. Check it out.