BuyandHold.com's New Accounts Jump 500%
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By Erin Joyce
Online commerce may have dipped in the days after the terrorist attacks in New York and Washington D.C. but not for BuyandHold.com, an online brokerage for long-term investing.
The start-up, which features dollar-cost averaging accounts that can be started for as little as $25, saw a 200 percent increase in new accounts on Monday following the four-day halt of trading after the World Trade Center collapsed.
As of yesterday, that new account increase had jumped to about 500 percent, said Peter Breen, the CEO of the company which is based on Water Street in the financial district.
"We had about 20,000 trades on Monday, about double what we usually do," Breen said. "It was an awe-inspiring outpouring from customers," who also swamped the company with emails asking if everyone was ok.
Within two hours of the markets reopening on Monday, the buy to sell ratio was six-to-one in favor of buys, despite the drop in the major indexes that the markets had expected. The sentiment continued on Tuesday too, as individual investors stayed "long" on America.
Buyandhold.com aggregates its customers' accounts and goes into the market three times a day to execute the bulk trade orders. On Monday when the markets reopened, the ratio of buys to sells in the company was about six-to-one and jumped to as high as eight-to-one at times, company officials said.
After Breen's office was evacuated last Tuesday and all the employees of the company accounted for, he said he watched as the buy and sell orders started lining up in the company's system during the historic four-day halt in trading that followed the events of September 11th.
"People were placing buy orders. It was quite the queue when the flood gates opened on Monday morning," said the former American Stock Transfer and Trust Company executive.
Although Breen acknowledged the patriotic buying that was part of the markets' dynamic this week, he also felt small investors weren't being "deaf, dumb and blind" about the markets.
"I could argue that there's been no wrong time in history not to buy America."
Those who stepped in when the markets dropped Monday will be rewarded if they have an investment horizon to watch for, he added. "So certainly if our customers are sticking to their course (of long-term investing and building their accounts), they saw a great opportunity when the markets opened."
As BuyandHold.com's traders went into the markets with their aggregate orders, Breen said he was amazed at the orderly way the markets handled record trading volumes.
"I watched the executions and the settlements, it was just phenomenal when you consider the World Trade Center was a big telecommunications hub," he said.
"Americans in general are tough. But New Yorkers are Teflon. It makes me really proud to have this firm located right here in New York."
BuyandHold.com counts Goldman Sachs and the TH Lee.Putnam Internet Fund among its venture backers. It has an estimated over-300,000 accounts and its active accounts are estimated at over 130,000.