Saturday, October 20, 2007

Zecco and the future of trading

Free trades are the best thing ever. They allow you to minimize the risks involved in buying shares, especially for people who start with little to invest in the first place. For example, say you start with $10,000. With that kind of money, you can realistically buy 5-10 different stocks with a reasonable holding in each of them. If, however, it costs you around $10 every time you buy and sell, that turns out to be already eating 2% out of your gain. Say you choose a good stock and in a short period of time, like a month or so, it goes up by 10%, you could sell it and be satisfied with a 10% per month profit. But suddenly it drops down to 8%.
Free trades means that I can buy $400 worth of a stock, then buy $500 if it goes down by some threshold percentage, and perhaps buy $600 worth of it if it goes even farther down, and be invested a fair $1500.

I've been using zecco (www.zecco.com) for less than a month now, so it's still a little early to draw any conclusions. Reading up on it can be frightening until you see the dates of publication. I haven't sold anything yet, so I don't know what I've gotten myself into yet. Hopefully it's as good as I imagine it to be.

In the meantime, my stocks have been going down significantly (but are still higher than the S&P gains YTD). Increasing oil prices, decreasing housing prices, and credit concerns aren't going to help the market gain much in the coming months. Tech stocks might be a guiding light, especially after Google's earnings report and possibly Apple's this coming week.
Uncertainty seems to be characterizing this period: for the average investor and Bernanke himself, there really seems to be a dense fog obfuscating the financial future of the country, and the falling dollar seems to have started to do more harm than good. October is famous for black Monday, the anniversary of which was yesterday, so let's hope we've just passed the trough...

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