Economics Project Abstract
A COMPARATIVE ANALYSIS OF BROKERAGE FIRMS
Presenter:
Alison Ruddy, Illinois Mathematics and Science Academy, 1500 W. Sullivan Road, Aurora, IL 60506; alison@imsa.edu
Advisor:
Michael DeHaven, History and Social Science, Illinois Mathematics and Science Academy, 1500 W. Sullivan Road, Aurora, IL 60506; 630-907-5000; dehaven@imsa.edu
Abstract:
The internet has dramatically increased the capability of the individual investor to directly control his own portfolio. Analysts from the Wall Street Journal estimate that 25% of all trades completed by individual investors are executed by web based brokerage firms. Several market consultants contend that the current volatility in the market is due in part to the increase in the number of investors, many of which trade primary through online brokerage firms. This research project focused on the advantages and drawbacks of traditional and online methods of trading. It was found that while online brokers generally offer discounted rates, a wider range of service hours, and a lower minimum balance, traditional brokers provide more reliable service and better customer service. Due to the limited amount of time online firms have been executing trades, little government regulation has been passed to protect the individual entrepreneur. Online methods of investing, therefore, leave American capitalist more susceptible to offshore frauds and computer glitches. Despite the various risks associated with this new industry, internet trading has become valuable tool to many educated investors. This technology has changed how individuals choose to invest in today’s markets.