(November 28) – “When the market takes a turn for the worse and stock prices fall, it’s not just investors who bear the brunt of the decline. The brokerage firms that investors use to place trades also suffer,” writes Stacy Forster in today’s edition of WSJ.COM.

“Many online brokerage firms are indeed feeling pain — hurt by the death of dot-com mania and extended pessimism in the stock market. But analysts were betting on a shot in the arm as is customary around year-end.”

“However, hope is beginning to fade away for the traditional boost as the year draws to a close. Uncertainty over the presidential election and profit worries have chased many investors to the sidelines.”

“Analysts once again have begun to ring warning bells for the online brokerage group, worried that profits will be pinched by a fall in trading volume and account growth if the air on Wall Street remains damp.”

“Indeed, Greg Smith, of Chase H&Q in San Francisco, lowered his fourth-quarter earnings estimates for Ameritrade Holding Corp., E*Trade Group Inc. and Charles Schwab Corp., on Monday.”

“Representatives from E*Trade, Ameritrade and Schwab did not immediately return calls for comment.”

“Mr. Smith, a prominent online brokerage analyst, says he expects online trading volumes to grow by 5% rather that the 10% to 20% in his earlier forecast. He blames “sharp market declines” this month and general nervousness among investors during a rocky period on Wall Street.”

” ‘This is the last straw for retail investors,’ Mr. Smith says. ‘They absorbed the sharp correction in April O.K., but things went from bad to worse … this pain has got to play out.’ “

“The Nasdaq Stock Market, a favorite hunting ground for online investors, has been particularly rough. The Nasdaq Composite Index is trading near its lows for the year. The index is down more than 21% since the end of September and is down almost 42% from its high point in March.”