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We, The People, said: “NO to commissions!” We got free trading now: April 23, 2007

Posted by deminvest in AMTD Ameritrade, BAC Bank of America, ETFC Etrade, growth stock, Internet stocks, investment, investment strategies, nasdaq, Nasdaq stock, SCHW Charles Schwab, stocks, zecco.
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At zecco.com and Bank of America (BAC) commissions are ZERO. 0, this nice round number, may mean big troubles to Ameritrade (AMTD), ETrade (ETFC), Charles Schwab (SCHW) and many other brokers… Do we, the people, care?

 

Not really. What we really want is to stop giving our money to blood-sucking leeches. We hate commissions!

 

blood-sucking-leeches.jpg

LEECHES? Don’t worry, the little blood they take won’t hurt you.


When we invest, we use our hardly earned money, and we work to input our data and computers the computational job : a job a million times simpler than than the job to show us a result page on a search engine research.

Why “did” we have to pay many dollars for that simple job? Because of a Medieval tradition I guess. BUT NOW WE SAY NO! In a low-cost global society, when We The People want, we eventually do win: let’s see what we got this time:

1) 40 free trades [this is changing] per month at zecco.com .

Is there a catch? No, there seems to be no catch. Just an honest further limit of 10 trades in a day, an understandable first deposit minimum of $2500 and an interest rate on uninvested money a bit lower that other on-line brokers.

Can we trust zecco? Probably yes. One of founders of zecco.com, Morten Lund, was among the few heroes who gave us “free speech” (not the one the right that was given us by Constitutional Fathers, the that we got from Skype when we stopped having to pay to talk to each other long distance). After getting “free speech”, we believe Morten to be capable of giving us “free trade”.

2) 30 free trades per month at Bank of America. BAC is a trustworthy institution; I even own their stock. Unfortunately they require a banking account of $25000 minimum to get the free trades. Not all of us can meet that kind of requirement… unfortunately

In the middle between the huge bank and the Internet pirates we find someone who is is big troubles: Online brokers who built their fortune on low commissions, which were low compared to what one could find 10 years ago, but are a rip-off compared to zero. Ameritrade (AMTD, Forward P/E=12.5 ), ETrade (ET Forward P/E=11.4), Charles Schwab (SCHW Forward P/E=17.9 ) and their likes are in trouble… They are still growing, but they their stock is already cheap (very low Forward P/E) because investors are afraid they will have to join the “zero commissions zone” sooner or later… or else they risk to disappear, because We, The People, don’t forgive whoever refuses to go low cost!

A few useful links:

http://www.usatoday.com/money/perfi/columnist/krantz/2006-10-17-free-trades_x.htm

http://www.techcrunch.com/2006/09/22/3014/

Concerning this particular proletarian investor writing on deminvest:

In the last 12 months I have made 70 trades, wasting around $1200 of commissions. I only see advantages on zecco. I don’t care about low interest on unused money on the account: with free trades I can park them in seconds on Bonds or Bond-ETFs that offer good yields, so there won’t be money sitting on my zecco account.

As soon as I’ll have $2500 cash and as soon as I’ll stop feeling too lazy to fill all necessary papers, I’ll open a brand new zecco account.

Comments»

1. notreallysure - April 23, 2007

Are these just market orders or all order types? Can you route the orders?

2. deminvest - April 23, 2007

From what I have understood on zocco.com and reading around Blogs and newsgroups you can route orders. I also believe they are orders of types.

I will be sure only after I have my own account to test.

3. notreallysure - April 23, 2007

OK, Thanks….just wondering if that was how they were offering them free.

4. deminvest - April 23, 2007

1) They will only pay interest rate around 1% on money that is left uninvested on customers accounts. That money will yield 4% to zecco. They will keep the difference to cover their expenses and to make some profit.

2) They sell advertising on their site. You can find google adsense advertising on zecco.com homepage

3) Unlike Ameritrade, Etrade and Charles Swabb, zecco will not spend huge budgets on advertising. They will wait that the news of free trades spreads from investor to investor…

5. CrossProfit - May 2, 2007

“zecco will not spend huge budgets on advertising”

Not so sure about this.

Zecco has a smaller advertising budget as they are new and smaller. As a percentage of revenue it may be the same as their competitors.

Also check out the speed of transactions. On low volume (less than 1000 shares) it may not make a difference. On higher volume market trades, you may find that $0.01 covers the commission; also check limit orders execution. For small investors, Zecco seems fine though this should not be taken as an endorsement. No personal experience with Zecco, great personal experience with Firstrade.com and others. Firstrade execution is extremely fast.

Disclosure: This comment is the personal view of a CrossProfit analyst and may not be the opinion of CrossProfit.com.
http://www.crossprofit.com

6. deminvest - May 2, 2007

I am not sure either. Actually we, small investors, can never be sure of anyhting. I do have several reasons to think they will have a small Adv budget:

1) I navigate many finance sites, but never saw their Ads.

2) On a zero commission basis they can’t factor Ads into their businessplans

3) This is not the only Blog about zecco.com . The Blogsphere is giving them huge free viral marketing push.

4) They are selling Ad space on their homepage. A company that spends heavily to attract user doesn’t send the away for few Adsense cents. You won’t find any external advertising on Firstrade!

I am still in the process of subscribing to zecco, but I have no reason to think they will do slow trading.

One of the founders was also a Skype founder: the kind of people who knows how to use technology. Zecco may be among the fastest online trading systems.

Often low modern lowcost services are more performing that their high priced counterparts. Lowcost airlines have fewer delays, Linux Webervers are faster and more reliable.

Once I have my zecco account up and running I will try to figure out how fast it is. Maybe you can help me, because I have no idea how to test its speed.


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