This column was originally published on RealMoney on June 16 at 9:56 a.m. EDT. It's being republished as a bonus for TheStreet.com readers.
worth? How about
( SCH)? These are tough questions. E*Trade and Ameritrade both sport forward price-to-earnings ratios of 17 to 18. Schwab trades for 24 times earnings.
These are more than twice what
trades for. The market seems to like the electronic trading model and dislike the investment banking/hedge-fund-buried-in-a-broker model.
Does that make sense? I don't know. I think that the online guys are experiencing fast growth but if the retail investor gets shaken out, you will be overpaying. I think the retail investor is here to stay, but that's not the case if we resume the downside and stay down for a long time.
I think the issue is that the other old-line brokers are just too cheap. I still don't get how the Goldmans and the
( BSC) trade at 8-10 times earnings. That's just too cheap. These are premier franchises that are much better businesses that any of the discounters.
Would I swap the discounters for the old-liners? No; I would just recognize that the real bargains right now are with Bear and Goldman after those unbelievably good quarters.
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