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Subject:  Schwab for Bonds Date:  11/28/2012  6:00 PM
Author:  trader2012 Number:  34530 of 36310

This is a rant. Stop right there if you don't want to read it.

Yesterday, after not having had an account with them for many years, I opened one at Schwab, because I wanted to see what they offered in bonds. Today, one of their "new accounts specialists" called, asking if I had any questions. When I mentioned that Schwab was marking up, as well as applying a commish, meaning, they weren't offering competitive prices on bonds, he got defensive and said that he had talked to hundreds of clients and that, of course, Schwab offers the best prices, and this was this first he'd ever heard this.

(1) Schwab doesn't quote lower than B3/B-.
(2) Schwab marks up. Period. End of story.

Where it can be useful to do a trade through them is when they are holding a lot in-house and trying to blow it out on a cross-trade. But that's true of every broker who sell bonds. What they are holding in-house they are generally willing to let go at less than the NBO.

Their website is clean and easy to navigate, and --predictably-- their margin-rates are abusive. So, as always, there are positives and negatives, strengths and weaknesses, and each investor will have to determine his or her own needs and then find brokers that meet them. But I'd rank Schwab as a poor choice for bond-investing.

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