ChinaGasGuy

Brokerage Stocks: Trouble on the Horizon?

I do not know much about schwab and the other broker you mention, but you I am extremely familiar with the insides of IBKR. Your 'analysis' is the typical back of the envelope supposition that gets amateur investors very deep trouble in the stock market. The current environment is actually quite favorable to IBKR as their profitability is substantial driven by volatility, and often hurt by a high level of front running which occurs when there is a high level of M&A activity (which has fallen off a cliff during the past 12 months). The do not take net long or net short positions and close each day with a fully matched position comprised of listed securities. They do not, btw, make a lot of money on cash balances like other brokers who offer only puny interest rates on cash. They are uniquely poised to add market share at this point and have the luxury of cherry picking better quality customers rather than the lowest common denominator of the hedge fund world. As for customer service, if you are looking for Chas. Scwab-like customer service (i.e. someone to tell you how to fill out your deposit slip) you would not be satisfied with IBKR, but if you are a small sophisticated institutional investor, you will enjoy an equally sophisticated counterpart.

I agree with the other commentator who suggested Seeking Alpha should raise the bar... this kind of 30,000 foot 'analysis' is really not helpful and belongs on the yahoo bulletin boards.