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The easist way to see what kind of financial
position your brokerage is in is to learn to read the financial reports and
instead of looking just at the raw #s look for trends that may indicate
problems, like lack of profits / cash flow / large debt coming due with no way
to renew etc. Don't rely on the auditors, take Anderson as an example
there. It is in the accounting firm's best interest to remain the auditor
so sometimes accounting firms aren't as diligent as they should be just to keep
the client happy. But the best indicator (and easiest for people with charting
apps and data) is to take a look at a long term price chart of the company's
stock and see where it is at. If you are in a long term freefall then the
company (brokerage or no) may be in deep trouble.
But all this is moot unless you are planning on
buying / selling their stock because all stock brokerages that are regulated are
insured by the SIPC on cash up to 100K and securities up to 1 Million. (If I
recall correctly) If you have a futures account, all bets are off so only
use capital you can lose.
Patrick White
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----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
neo
To: <A
href="mailto:metastock@xxxxxxxxxxxxx";
title=metastock@xxxxxxxxxxxxx>b_MetaStock List
Sent: Friday, January 18, 2002 3:06
PM
Subject: How safe are our
brokerages?
With
the onset of major bankruptcies, I think it is important to consider the
security of your broker. Besides Enron (world's 7th largest company), K-Mart
(world's 3rd largest retailer), and JP Morgan, many other well established
companies are in trouble. Many of the newer online brokerages and mutual funds
are part of the dotcom era. I wonder how solvent they are?
<SPAN
class=000501519-18012002>
I
just finished reading an article about what I felt was one of the most secure
(although expensive) online brokerages. In Q3 2001, Schwab's trades were down
26% from Q3 2000. In response Schwab has begun selling investment
advice. This is not making Schwab's independent advisors happy and they
account for 1/3 of it's total client assets. In addition, estimates are that
Schwab's 2001 net income is down 50% from 2000.
<SPAN
class=000501519-18012002>
<SPAN
class=000501519-18012002>
<SPAN
class=000501519-18012002>How can we tell how
solvent out broker is?
<SPAN
class=000501519-18012002><SPAN
class=290490420-18012002>
<SPAN
class=000501519-18012002>neo
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