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Who would make a better banker and broker in the New World:




Goldman Sachs











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I could tell you now which one I think wins, but you won't read any further because you would think it too preposterous. So let's go over them one by one, with an open mind and a profound sense of how much the world will change in the next two or three years.

First, let's start with Chase. Heck, why not? That is who I bank with now. I have never met anyone at Chase in person. But the branch knows people from my company, and Chase has a nearby ATM. My statement comes in the mail each month and it seems accurate. I know it has some sort of online banking thing, but it hasn't incentivized me to use it, so I haven't. Maybe if Chase offered me a free subscription to a paid service like

for opening an online checking account, I would go there. But you have to give me something to get my eyeballs. They just aren't going to wander to all by themselves.

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Frankly, the reason I went with Chase at all is because there was a Chase branch around the corner from where I worked at Goldman Sachs 15 years ago, so it didn't take long for me to deposit my paycheck and get back to work. That was with


(CMB's forerunner) anyway. I got friendly with the manager but he got shifted somewhere else immediately. As did the next two managers. Then I just gave up trying to meet the manager, which, each time, was initiated by me anyway.

I can't think of much good to say about them. When I went to get a mortgage on a new house a couple of months ago, I immediately went to Chase, and it offered me the crummiest rate of all the brokers I tried, despite my having an outsized credit balance that it has made a small fortune on for the last decade. When I tried to bargain by mentioning my great banking record (no bounced checks in my history), high credit balances and even the fact that


has Chase as an investor, that got me nowhere fast. I think the guy thought I was making it up!! There's high touch, there's low touch and then there's no touch.

As far as Chase brokerage and Chase mutual funds, well, I think they own some outfit called

Brown & Company

that has been running these really low-rent commercials for many years. I am not going to trade with them; it has no reputation that I know of. I would sooner trade with Chase, which has a good brand name. The mutual funds I once read were pretty good, but I haven't heard of the managers lately so how do I know they are still on the job? The fees, I am sure, will be high.

Yet, right now Chase is my bank by default. It is really my ATM. If someone were to set up a low-cost, no-cost ATM machine between my office and Chase, with some personal touch, I would move in a flash. It does anger me how much money Chase has made off of me, vs. how much I have made off of it.

Goldman Sachs is an interesting choice. Best brand name. Great research. So what? It charges a lot and it has nothing cooking electronically to date. I want to have my bank be on my desktop in the future. Time is everything for me, and the Goldman solution doesn't address that. I need more time, so I need a PC banking platform. This firm is a very traditional brokerage. I don't even know if it offers any other features that I might want. And it doesn't have any ATMs or dot-coms.

But there are human beings there who know me. And for me, that trumps everything. If I had a brokerage account, I would probably put it there for that reason, though. (My wife and I don't have brokerage accounts because we think it is an inherent conflict with my fund. If I have a good stock idea, it has to go to

Cramer Berkowitz

. Personal accounts for hedge fund managers, whose interests are supposed to be totally aligned with their partners, are simply unethical in my book. That's common sense. Let me ask you: If your money is managed, does your manager have one?)

Goldman has great Wall Street research, but is that what moves stocks anymore? The guys on


have proven to me that Wall Street research is a dubious commodity. Bunch of penguins. Research sure is an expensive commodity for the brokerage houses, which need it, chiefly to keep the underwriters happy. I know Goldman's reputation will keep the research department independent, but does it make me money? No one has proven that to me.

Anyway, maybe research is overrated in a world where

Adam Lashinsky

tells me something about



that no brokerage knows or

tips me off that



is the next



. Most Wall Street tech research can't stack up to the insights an unbiased

Jim Seymour

brings to the table in our pages. It is definitely overrated when compared with

Herb Greenberg's

warnings about

Family Golf



Superior Consulting



Party City












Premier Parks



Just for Feet






CHS Electronics


and so many others that I have lost count. In the new world, news and analysis to Wall Street research, is rock to scissors in my play book.

The problem with Goldman is that I want one place for everything, and Goldman doesn't yet have a good desktop/Internet solution for when I don't need a person. I worry that if I have my accounts spread over a whole bunch of places, it will generate too much paper and be too hard for others to understand in my absence. Goldman flunks that test completely. Again, though, because there is someone who knows me there and will take my call instantly, I think that can be dealt with. Goldman is a good choice, certainly not a


, but GS is not a convenient, cheap alternative by any means.

If convenience, one-stop shopping and an array of low-cost brokerage and banking alternatives is all that I want -- and that's a ton of goodness -- Schwab has it now. It always bothered me that people would say "It is ridiculous that Schwab's market cap is bigger than



." To me it makes all the sense in the world. Schwab is as close as it comes to an electronic banker I could ever find. Merrill is as close to a nontechnological broker as I can find. Remember, it was Merrill, not Schwab, that warned America that doing it yourself would be hazardous to your financial health. I believe taking control of your finances may be the single smartest thing you can do in your life. Schwab agrees with me on the do-it-yourselfers and gives them the tools they need to do it cheapest, fastest and maybe best.

In fact, amazingly, Schwab has become the


electronic banker. (You have to love the power of marketing!) Sure, it lacks the personal touch that Goldman could give me, but I can get research, any mutual fund I want, solid brokerage and one statement. Hallelujah!

Schwab doesn't have the ATM thing down. But if it were able to bamboozle some sort of reciprocal arrangement with Chase, or



with a Schwab card, then it would be the total win right now. No wonder Schwab has claimed the high turf right in this nation's eyes. It has the tech/convenience/one-stop shopping edge. What's amazing is that it did it without ever hurting gross margins or giving up on anything else, even as all other brokerages fiddled and now may be burning. That's good management. No wonder my wife recommends Schwab to my mother-in-law. (Don't worry, she doesn't trade either.)

Now let's get to some interesting candidates. Again, we have to presume that I would be a stock trader with a personal account for the purposes of the discussion.

? Let's say night trading takes off and I want to come home and fiddle with my account, do a few winning trades and manage my money myself in a do-it-yourself

Home Depot


fashion. I put the TV on, there is a ticker tape, an independent talking head and an outside guy making recommendations. After he's on, he goes to

and I can ask him about the stock or find out more than can be generated in that little TV blurb. If


is smart. I can even call up his picks before and see how he has done. I want to buy, I click a button to


ECN, and I have executed the trade.

I don't have to pay the brokerage house or mutual fund this guy works for! I give the trade to the company who suggested it:


. If


were to set up a place for me to write checks on and keep a credit balance, that would be darned interesting to me. If



Abby Joseph Cohen

and a couple of other top people, it could be the brokerage house of the future!

(I chose

because I did not want to choose

, which

regards as a principal competitor -- and you wondered why you don't see me on that network any more? In many ways

makes more sense than


if it were grafted with an



or a

DLJ Direct

or whoever is willing to take a piece of the action in conjunction with the content that generates trading from


. When


's portfolio tracker comes out in a few weeks, I think you might choose


for the one-stop after all. But


doesn't want to be in the business of helping portfolio managers push stocks. And, unlike

, it doesn't want to compete with its advertisers.)

I am on the run a lot and I like knowing about my money when I am on the run. In a wireless world, where I am always in touch by my handheld phone, I would love it if Nokia were to allow me to buy and sell stocks, learn about them, handle my email and give me one phone number to address it all. Nokia could also give me a beeper system to flag important stocks of mine as they change by a couple of points. That would be awesome. Of course, I don't think of Nokia as a bank. If Nokia were to merge with Goldman, holy cow, that would be a powerful one-stop alternative with high touch when I need it. I am salivating at that idea. A programmable wireless phone that would allow me to move assets around, buy and sell stocks and be in touch anywhere! By george, maybe Nokia's got it by virtue of being in control of the wireless browser! Don't rule them out. It is more up to them than to anyone else.

Microsoft has to be considered the banker/broker of the future, if it wants to be considered one. I say that tentatively because maybe this business won't be a good enough business for them in the end. Maybe its margins will be too low!

Microsoft has a terrific quality brand name with great software including good tools. More important, it can always pull a



with some bank. Pulling a Comcast means writing a check for $500 million to keep somebody happy and make them dance to Mister Softee's tune. The

Justice Department

is never going to investigate them for giving money away and everybody is eager to take it.

Nokia could box out MSFT of the wireless world, but in the wired world, MSFT has some great advantages. You can shop from its destination and keep debiting from the account. You can trade from it and keep debiting from the account. You can order tickets from it. You can buy cars from it. And it may be able to subsidize these so that you actually pay less (a la



) for everything you do. Because it can subsidize anything it wants (it is kind of like the government when it comes to subsidies) I would say that if

Steve Ballmer

wants to be your broker, he will. (YOU WILL BUY MICROSOFT STOCK NOW OR I WILL BE THE STUFFINGS OUT OF YOU! Ah, the old Ballmer subtlety.)

The question is, how much money is Microsoft willing to lose to do it? Once this nasty Justice Department spat is finished, I figure MSFT does some undercover superpredatory pricing and basically buys your account.

(Disclosure: When we started


I toyed with the idea of going out to see my friend Michael Kinsley from


and asking him if we should merge with his outfit, which would allow MSFT to offer tradable headlines and news via MSFT CE for wireless and the desktop, something that I think is proprietary and would make their Microsoft Money section invaluable. But I didn't want to move to Seattle and I was kind of enjoying our independence.)

Lastly, let's discuss the peoples' choice. When


is not my home page, Yahoo! is. I gravitate to the Yahoo! page for just about everything. It has an edge by nature because it is on all of the time. It is my one computer TV station. It has done that because it is simple to use, fast and reliable and free. If Yahoo! were to partner with E*Trade, or buy E*Trade, and offer me the bare bones, simple, easy-to-use brokerage and combine it with all of that juicy news that Yahoo! offers as well as a wireless solution, then Yahoo! wins hands down.

Here's why. Unlike


, which can only program one manager at a time, Yahoo!, through its brilliant buy of

, owns the capability to put on all of the roadshows I want to see. I can put a streaming ticker on my Yahoo! page, call up the roadshows I want when I get home from work, check the news file for interesting things and buy whichever company strikes my fancy. If I want to discuss it with a person, I can go into a chat and hash it out with people not trying to get a cut to sell it to me. If I want more news, it is there.

Yahoo! also has the capability to be the underwriter, as it has the roadshow computer-casts and an outfit that could handle IPOs. (Of course, if we could find a way to print out U.S. legal tender money that would be good at stores, just by hitting a premium print button on my laptop or desktop, it's game over for everybody else. Maybe it could develop a sort of Yahoo! traveler's check that could be printed out on command? Makes mucho sense, if you could everybody to accept that kind of tender, but that seems fanciful.)

All of this would tax Yahoo!'s management, but that's not stopped them from trying to take over the world before. Maybe Yahoo! captures all of the value-added in this chain. That would be something, wouldn't it? If that's the case,



or MSFT better buy Yahoo! (Yes, I am long it!) Ideally of course, I want the convenience of the ATM from Chase, the possibility of being known by someone from Goldman, the one-stop supermarket from Schwab, the instant nighttime trading ability from

, the all-in-one handheld browser with instant access anywhere from Nokia, the shopping-in-one-place nifty alternative software from Microsoft and the ultimate home page with massive reliability, cheap trading, news and streaming video (for the roadshows/IPOs) from Yahoo!. Any one of these companies, if it would swallow some pride and put on a deal hat, could make this choice happen.

If that occurs, where in the world would

First Union



Bank One


or your local S&L or even Merrill Lynch fit in? Hmmm, maybe that's why those stocks never, ever seem to go up except on takeover rumors. No matter what, they may just turn out to be part of the history of the 20th century. I can't see how their historic margins can ever come back, now that the Internet genie is out of the bottle. At best they will be radio of personal finance, now that TV has come along. Still viable, still profitable, just not that important. At worst they will be anthracite coal, still used but hated by anyone stuck with it. Or maybe gas lights, which used to be everywhere but are now simply lore. One thing is certain: Any financial firm that is not discussing these kinds of scenarios will simply be left in the cyberdark. Time's wasting. Someone is going to win this whole ball game in two or three years. I'm placing my bets now.

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund was long Yahoo!, Microsoft, Goldman Sachs, Home Depot and 3Com and Cramer was long His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

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