Seeking Alpha

High cotton for online brokers

  • Nothing the owners of these stocks don't already know, but SNL Financial puts together a neat chart showing the correlation of Daily Average Revenue Trades (DARTs) alongside the stock prices of Schwab (SCHW -0.9%), E*Trade (ETFC -3%) and TD Ameritrade (AMTD -1.5%). Guess what? They correlate.
  • Somewhat tepid since the financial crisis, retail trading is making a comeback, but still has a ways to go until they return to pre-Lehman levels.
  • Citing lower yields on margin balances, KBW suggests re-engagement of active traders is behind the boosted activity rather than an influx of casual traders. Active traders tend to have higher account balances and pay lower rates.
  • One sign of optimism in the sector - boosted spending on advertising. E*Trade can now get a higher marginal return on investment and marketing dollars, said CEO Paul Idzik on the earnings call last week (transcript). At TD Ameritrade, advertising spending rose 21% Y/Y. CEO Fredric Tomczyk: "We think … now [is] the time to tap the gas pedal a little harder on advertising."
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