Zecco Adds Minimum Balance Requirement and Reduces Number of Free Trades

By MoneyBlueBook

Was it too good to last? Only time can tell. Zeccojoined the online brokerage scene only a year ago promising free trades and even slashing minimum balance maintenance requirements during the summer. Now the balance requirements are back and they've even reduced the maximum number of free trades allowed per month. Zecco issued the slightly disappointing news release today.

Changes You Should Know

Customers who applied before October 1, 2007 will get to retain the old pricing structure until 2008. However, the policy changes applies to all new customers from here on. Under the new structure, Zecco reduced the number of monthly free trades from 40 times to 10 and slapped on a minimum balance requirement. To qualify for the 10 free trades per month, you must maintain a minimum balance of $2,500. If you have less than $2,500, each will trade cost $4.50. Despite the changes, the cost is still lower than that charged by other brokerages.

I find it sort of ironic that in my earlier post about Zecco I thought perhaps the new brokerage firm was signaling a change in the way online brokerages were going to do business in the future - focusing more on cash interest and other services than relying on commissions to generate revenue. It is quite remarkable how soon and fickle company policies can be. I guess one can never get too comfortable with any one particular financial product. The terms do change and you just have to keep up with the times and changes.

By MoneyBlueBook

Zeccois a discount broker that's been generating a lot of buzz since they started offering free stock market trades last year as part of their very pinkfriendly trading platform. They currently offer 10 free market or limit trades per month, so long as you maintain $2,500 in total account equity (stocks and cash). There is no minimum balance requirement to open an account, but if you have under $2,500, trades will cost $4.50 each. There are no inactivity fees, which is quite a bonus for those who don't trade too frequently. Your securities accounts are also insured and protected against loss by the Securities Investor Protection Corporation (SIPC).

Is There A Catch With Zecco?

According to the Zecco website:
There is no catch. We can give away free trades because the cost of executing a trade has become very low. And like other brokerages, we make money on interest income and option trades. Pretty simple right?
If you're an active trader, the lure of free trades is tempting. However, keep in mind that free trades isn't everything. Zeccohas been around for only a year, which is still a relatively short amount of time in the brokerage world. Questions remain such as whether they will be around for the long haul. What about customer service and trust? Can they execute timely trades and can they offer trading platform services that can compete with those offered by other brokerages?

Moving Towards a Free Trades Market

It is interesting to note that Zeccomay have signaled the

By MoneyBlueBook

Are you like me? Do you keep idle cash sitting in your investment brokerage account while waiting for a juicy investing opportunity to come along? If so, you might want to make sure that idle cash is getting the best interest rate it can.

The stock market's been volatile lately so I've chosen to park a sizable amount of cash in my primary investment account as I wait for the right buy opportunity. But if you're like most people who adopt an old fashioned buy and hold strategy, you might not realize how low of a return you are getting on that idle cash. Your cash pile may be missing out on some great opportunities as it sits parked in your brokerage account. That's because many brokerages only pay you a pitiful rate of return on idle cash by default. Oftentimes, brokerages pay an interest rate as low as 1%, while they make a bundle by investing your money for themselves.

Upgrade to a Higher Interest Rate Money Market Account

If you want a higher rate of return you must ask your brokerage because usually most deposits are automatically swept into a low interest holding account by default. If you don't contact them and ask, they have no particular incentive to let you know that you have higher interest rate options for your idle funds. For starters:

By MoneyBlueBook

As was expected, the Federal Reserve cut a key short term interest rate yesterday by a half percentage point to 4.75%, sending investors into a frenzy. Investors went bonkers and jubilantly bought shares, sending the U.S. and world stock markets soaring. The Fed also indicated that more rate cuts could be on the way. Interestingly, federal funds futures on the Chicago Board of Trade are now pricing in a 100 percent chance that the Fed will cut rates at least one more time before the end of the year.

I have to applaud the Fed for being gutsy enough to take aggressive action amid the credit and mortgage market meltdown. While this certainly won't solve the sub prime mortgage mess immediately, at least it's a move in the right direction. I personally think the housing recession still has a long ways to go before recovering. But why am I still very skeptical that this resurgence is for real? That's probably why I still have un-invested cash on the sidelines, waiting for the right opportunity.

My Current Investment Portfolio for 9-19-07

I logged onto my Fidelity Investment account at the close of trading and took a peek at my gains for the day. My portfolio was up 5% due to the Fed's announcement, a remarkable one day gain with impending recession fears only a few weeks ago. With today's Fed announcement, I think now is a good time to evaluate my investment portfolio and financial strategy. And it's a doozy.

Looking at my portfolio it's plain to

By MoneyBlueBook

The Federal Reserve sets monetary policy largely by targeting the federal funds rate, which is a key short term rate that determines rates for banks, credit card loans, home equity loans, and other types of consumer and corporate loans.

Since the Fed is meeting in a few days to decide whether it will change the federal funds rate, let's get slightly technical and talk about one of the ways to predict what the Federal Reserve will do

In normal times, the federal funds futures market is usually a good predictor of what the Federal Reserve will do over the next several months. However, times are a bit out of whack right now and there is a growing disconnect between what people are fearing or hoping will happen and what a calmer and less pressured Fed will actually do.

Federal funds futures are contracts that are bought and sold on the Chicago Board of Trade and used mostly by speculators who want to gamble on interest rates. The prices reflected by the futures contracts represent investors and speculators' collective wisdom (or folly) about where short term interest rates are headed.

What Does the Fed Funds Futures Crystal Ball Suggest?

Based upon Friday, September 14's market close, the 30 day federal funds futures contract for the October 2007 expiration is currently pricing in a 100 percent probability that the Fed will decrease the target rate by at least 25 basis points from the current 5.25% to 5% at the Federal Open Market Meeting on Tuesday, September 18.

In

By MoneyBlueBook

I have been noticing a strange trend in the e-mail spam I've been receiving over the last year or so. There has been a steady stream of investment and stock related spam, each promoting a particular company's stock. Usually these are penny stocks of obscure companies in the lower rung of the stock market.

Do People Actually Fall For Spam Investment Advice?

The thing that makes me wonder is whether investment spam has a perceivable effect on market activity and spam targeted stock prices. My first guess would be that there shouldn't be an effect because who would be so gullible and naive to trade on information received in the form of spam? But sadly, as a testament to the fallibility of humankind, and the validity of the phrase "there's a sucker born every minute," spam DOES have a perceptible effect on targeted stock prices.

According to some research, investment spam does have a significant impact on certain parts of the stock market. One research indicates that:
Based on a large sample of touted stocks listed on the Pink Sheets quotation system and a large sample of spam emails touting stocks, we find that stocks experience a significantly positive return on days prior to heavy touting via spam. Volume of trading responds positively and significantly to heavy touting. For a stock that is touted at some point during our sample period, the probability of it being the most actively traded stock in our sample jumps from 4% on a day when there is no touting activity