For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.

"My top speculative choice for 2008 is E-Trade Financial (NASDAQ: ETFC), a great turnaround story," says Mark Skousen, editor of Forecasts & Strategies and author of the just-published best seller, Investing in One Lesson.

"E-Trade is one of the nation's largest, deep-discount stock brokerages. It provides order placement and execution for stocks, bonds, options, futures, and mutual funds to millions of customers in more than 40 countries worldwide.

"The company has more than $176 billion in customer funds and has won recognition for service, reliability and security.

"Unfortunately, the company recently was caught in the credit crunch, causing its share price to drop 80%. It held billions of dollars worth of risky securities. On November 29, the firm received a $2.5 billion cash infusion from Citadel Investment Group, a hedge fund. (E-Trade CEO Mitch Caplan lost his job as part of the deal.)

The financial sector has been strong today, led by merger rumors circling around two of the largest online brokers, E Trade Financial Corp. (NASDAQ: ETFC) and TD Ameritrade Holding (NASDAQ: AMTD), this morning. Both stocks have been moving higher on speculation that a deal could be inked to combine forces.

While it is still way too early to put a price tag on a possible merger, today's report states that one person familiar with the talks between the companies estimates that a merger would result in a new company whose value could approach the $20 billion mark.

What exactly is at stake here? For the two companies, the main benefit from a possible merger would be a nice decrease in costs associated with adding new customers to their services. But that is only the beginning of the benefit. The other side of the coin is something that could hit consumers where it counts the most: transaction costs.

Due to the highly competitive online brokerage market, companies have been pitched against one another recently in a fierce battle to attract and keep customers. By decreasing competition, a merger could (and probably will) allow the new company to lift transaction costs without having to worry about losing as many accounts as it would in a pre-merger environment.

MOST NOTEWORTHY: American Capital (ACAS), Doral Financial (DRL), E-Trade Financial (ETFC) and Family Dollar (FDO) were today's noteworthy downgrade:

• Jefferies downgraded shares of American Capital (NASDAQ: ACAS) to Hold from Buy citing the slowing M&A market and risk characteristics of the company.

• Soleil downgraded Doral Financial (NYSE: DRL) to Sell from Hold, on the belief that the recent reverse stock split will increase short-selling activity and discourage speculative buying.

• E-Trade Financial (NASDAQ: ETFC) was cut to Neutral from Buy at UBS, citing deteriorating trends in the credit/mortgage markets, lack of near-term catalysts; the firm does not see an M&A deal occurring near-term.

• Goldman downgraded Family Dollar (NYSE: FDO) to Neutral from Buy, citing weakness in the low-end consumer and increased pressure from Wal-Mart (WMT)...

OTHER DOWNGRADES:

• Wachovia downgraded Tween Brands (NYSE: TWB) to Market Perform from Outperform.

• Estee Lauder (NYSE: EL) was downgraded to Neutral from Outperform at Credit Suisse.

• Deutsche Bank cut Pearson (NYSE: PSO) to Hold from Buy.

• Matrix downgraded Talisman Energy (NYSE: TLM) to Hold from Buy.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required

MOST NOTEWORTHY: The pharmacy benefit managers sector, financials E*Trade Financial Corp (ETFC) and TD Ameritrade Holding Corp (AMTD) and transports J.B. Hunt Transport Services (JBHT) and Knight Transportation (KNX) were today's most noteworthy initiations:

• CIBC is positive on the pharmacy benefit managers group given increasing generic utilization, continued growth in specialty pharmacy, improving mail-order penetration and share repurchases. CIBC initiated Express Scripts, Inc (NASDAQ: ESRX) with a Sector Outperformer and $104 target as the firm expects continued strong performance as the company benefits from positive secular industry trends, and initiated Medco Health Solutions (NYSE: MHS) with a Sector Performer and $82 target on valuation.
• BMO capital started E*Trade Financial Corp (NASDAQ: ETFC) and TD Ameritrade Holdings Corp (NASDAQ: AMTD) with Outperform ratings.
• Cathay Financial started J.B. Hunt Transport (NASDAQ: JBHT) and Knight Transportation (NYSE: KNX) with Neutral ratings.

OTHER INITIATIONS:

• BMO started Charles Schwab Corp (NASDAQ: SCHW) with a Market Perform rating
• Citigroup started NYSE Euronext (NYSE: NYX) with a Buy rating and $113 target.
• AG Edwards initiated shares of La Jolla Pharmaceutical Co (NASDAQ: LJPC) with a Buy rating and $11 price objective.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

For the past two years I have been given 50 free (online) stock trades associated with my Wells Fargo & Co. (NYSE:WFC) Portfolio Management Account (PMA). I do not make anywhere near this many trades and do not expect to -- even in the next five years. So for me it makes all trading free. The PMA account has been convenient in many ways because it ties together my equity line, cash management, checking, credit cards, and stock accounts.

Recently, Bank of America Corp. (NYSE: BAC) has done the same thing and offered me 100 free trades. This seems to be the new direction in banking and relationship management. Telecommunications and cable networks are bundling services as well to increase revenue and make the relationship "stickier."

But as the banking services become similar, it's likely I will drop one bank for another and consolidate accounts further. This will likely happen a lot.

So who loses out? For me, in the short run it is likely to be Charles Schwab Corp. (NASDAQ:SCHW) because it still charges me for trading. Without the same network of branches as its competitors, it loses out on face-to-face contact as well. To mitigate this, I think Schwab will have to continue migrating its services toward asset management and banking and be forced to mimic the services of its competitors.

Mellon Bank / Mellon Financial Corp. (NYSE:MEL) (recently acquired by The Bank of New York Co., Inc. (NYSE:BK)) is also at a disadvantage (although it is not a retail bank and holds our business accounts only.) Mellon has been trying for years to increase the depth of our relationship, but for whatever reason has not elected to tie its services together and cannot compete with the full breadth of services offered by Wells and B of A. To its credit, however, Mellon has offered a high level of service for our many enterprises, and I doff my hat to Fred, Roger, Lynn, Janet, Tamara, Josh, German and Caesar in the Century City office. Without that valuable face-to-face relationship with them, we'd probably be gone.

All of the institutions we do business with offer what is referred to generally as "premier" banking. Each requires some level of account size or banking relationship to achieve a particular level of service. As competition heats up, this threshold will probably drop.

The price competition in stock trading and the consolidation of the industry has been, and will continue to be, forefront in the business news for years to come. E*Trade, Scott Trade, Fidelity and TD Ameritrade are all beating each other up with free trading offers, discounts to new clients, banking opportunities and more. You can find these amazing offers spread throughout the AOL Money and Finance pages and every other financial web outlet.

The very word "Bank" has become more and more obsolete, while "Financial Institution" becomes ever more relevant. For the consumer, the opportunities are expanding as the services and price competition keep increasing. Who do you "bank" with? Who do you "trade" with? Is there a better term than financial institution?

Check out my other posts for BloggingStocks here. and be sure and read You don't have to be 007 to find the best picks for 2007!

Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm.