Zero commissions — bah!

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The wealth management industry is in a tizzy after Charles Schwab, followed by TD Ameritrade and then E-Trade, cut trading commissions to zero because, as one spokesman says, it reflects a “focus on the customer.”


Free trading doesn’t help investors, it only encourages bad behavior. A real investor doesn’t do lots of trading. If they are somehow saving lots of money on trading because of this then, well, they aren’t investors.

As someone who’s been managing client assets for more than 25 years, we talk about “time in the market, not market timing” because long-term investing works. Trading doesn’t.

I defy you to come up with the names of three traders who’ve made serious wealth for anyone — beyond maybe themselves — by trading. But we all can name myriad investors, serious investors with long time horizons, who’ve made real money for themselves and for their clients.

Let the industry go all goo-goo eyes over this latest fee compression nonsense, but the bottom line is still the bottom line — trading is a fool’s errand.

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