Schwab seems to do things a bit differently than everyone else. They were early in understanding the power of ECNs as evidenced by smart-order acquisition of CyberTrader in 2000. They set up an independent algorythm to rate stocks, instead of faulty analyst method espoused by peers. They've managed to avoid the mistakes of E-Trade-- getting heavily into mortgages. Schwab should benefit long term from the lack of trust in major investment banks such as Morgan Stanley, CitiGroup/Smith-Barney, Merrill, Lehman and Bear. Trust is the #1 asset of investment banks, and its unclear if these tarnished names deserve consideration in the long term by either retail accounts or institutions. Frankly, it seems nuts to trust your money to a large organization that has already proven it can fail, and is thus poorly managed risk-wise. Schwab on the other hand should be a benefactor. This should begin to show in the near term, but even moreso in the long term. If this trade doesn't work out in the very near term, it should prove a good investment for the longer haul (3-5 years) as competitors continue to lose face. Kinda makes one wonder just how bad it has to get before government finally gives up on taxpayer money-sinks like AIGovernment, CitiGrab, and Sump of America.
$13.37 (02/04/09)
