Five Dumbest Things
The Five Dumbest Things on Wall Street This Week
5. Free Association
Bank of America (BAC) has zeroed in on a bold new way to grab customers. The Charlotte, N.C., financial giant stunned Wall Street Wednesday by offering free online stock trading to big depositors. Bank of America unveiled the program with full-page newspaper ads and a surprise New York Stock Exchange bell-ringing. Investors responded by hammering shares of the big online brokerages. TDAmeritrade (AMTD) tumbled 12%, E*Trade (ET) fell 9% and Schwab (SCHW) slid 4%. The move had observers speculating that online commissions everywhere are headed for zero -- a notion Bank of America was happy to drum home. "Banc of America Investment Services Inc. (BAI) will offer free ($0) online equity trades," reads the first paragraph of a Wednesday morning press release. In case you haven't made the connection between "free" and "$0," Bank of America is eager to oblige. "Free ($0) online equity trades at BAI represent the latest opportunity for consumers nationwide to benefit from a broader relationship through Bank of America," the press release continues. And that's not all.
"By introducing free ($0) online equity trading," said Liam McGee, president, Bank of America Global Consumer & Small Business Bank, "we are redefining what consumers can expect from a financial institution."
Blindingly obvious promotional material, for starters.
Dumb-o-Meter score: 79. Hold on, free means paying no dollars? None?
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| Dow Jones | S&P 500 | NASDAQ | 10-Year Note |
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