Have you seen the Ameritrade commercial where Mr. Mover & Shaker is trying to trade from his hospital bed in several casts with pulley and levers all over the place? The nurse moves the laptop and he is so desperate to trade that he tries to use a straw to hit the button.
Then he gets whipsawed on some news and wants to go back in and trade again.
To me all the commercial does is underscore the pitfalls of actively trading and if anything would make me want to trade less.
Maybe it's just me, but I am amused nonetheless.
Do I need to disclose that our personal accounts are at Ameritrade? I really don't know but they are.
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4 comments:
Lower commission costs have made it possible to construct sensible solid portfolios with much less money than was required in the past. Low commissions have also put pressure on mutual funds to lower fees. Indexed funds and ETF's have become popular because they can be bought and held cheaply. Lower commissions are also great from the standpoint of tax management. It now makes sense to take relatively small losses to reduce taxes.
It is amazing to hear the kind of trading that is being promoted by AMTD and others. The fee schedules are designed to encourage rapid fire trading. Most of those who participate are doing so as entertainment. They understand that they are basically rolling craps and that the house has an edge. They may not appreciate that the edge, counting the bid and ask spread, is as large as it is.
The only ethical issue is informed consent. If the traders are told and told again that rapid trading is not a valid investment strategy and that even small spreads and commissions result in a massive drag on results; normally resulting in losses of capital, then so be it.
Have you heard about Ameritrade's really discount broker, Freetrade?
(http://www.freetrade.com) Can you imagine how much trading can be done with 20 free trades a month? I don't think they handle IRAs, the account must be greater than $5000, and they offer no phone support. Found out about them on a blog who specializes in ETFs.
It may be a little too easy to make those trades ;)
Lisa
Lisa,
I'm in hysterics over this one, thanks. Here is a disclaimer from the site.
"Freetrade is not meant to increase client trading activity. It has not been proven that the size of the commissions has anything to do with being successful at investing."
By the end of April, FreeTrade will no longer be free. They are converting all accounts to a fee based ($5) Service called IZone.
From my FreeTrade account:
Freetrade accounts are being transferred to Ameritrade Izone on April 29
Ameritrade Izone offers low-cost features like NO share limits, and NO maintenance or order handling fees. The online stock commission is just $5. Review the commissions, margin rates, and service fees.
Izone features include:
FREE real-time quotes, enhanced stop-limit orders with separate stop and limit prices, customizable UserID and password, home page and order ticket.
What's next?
Read more about Izone and watch your e-mail for details.
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