In retrospect, I should have seen this coming. The days of incredible shrinking trade fees are over. That much was obvious when Ameritrade
Of course, Ameritrade had to start charging something on the deep-budget end; that's the only way it can make up for recent drops in trading activity. Ameritrade is a public company, of course, so profits come first, even if that means alienating customers -- 50,000 of whom bolted last quarter. But the price war may finally have taken its toll.
With this particular Fool among the many who feel like victims of a bait-and-switch (and who is joining last quarter's 50,000 in moving his accounts elsewhere), it's only natural that Ameritrade, lonely and spurned, would go looking for love -- and perhaps find it in a longtime rival's arms.
Today, Ameritrade shot up on a Wall Street Journal report of an upcoming offer from E*trade
The buyout would reportedly pay as much as $15 a stub for Ameritrade, though the press -- if not investors, who've left shares closer to the $13 level -- are looking forward to another suitor and a bidding war. Investors in E*trade apparently like the idea as well, bidding the shares up 6%.
This Fool wonders what's with all the enthusiasm. Is two times trouble really better than one? Does anyone really think that trading revenues will stabilize with fewer players on the field? For how long?
As merger activity in the markets themselves show, everything's going electronic, and as long as that's the trend, the trading fees are going to continue to drop. With JPMorgan's
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Get close to these related Fool takes:
- No more free lunch; no more Freetrade.
- See how Ameritrade joined the butterfingers gang.
- See the seed of Chucky.
- Does five bucks buy a lot of pain or a dose of gain?
Seth Jayson owns none of the companies mentioned.