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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