Richard--E*Trade could be profitable tomorrow if it decided to take a less aggressive (and much more stupid) approach to growth. The reason that E*Trade has aggregated 10 times the accounts they held back in 97 when they WERE (as you noted in all caps) profitable, is just that: they've spent money to grow. In '97 when I first invested in this company, it was clear that Cotsakos was much more focussed on the bottom line than, in my view, he should have been. Luckily, the astonishing growth of other internet companies convinced him (again, in my view) that the model for success wasn't having E*Trade show increasing pennies per share of profit per quarter, but to aggressively advertise and grow the business.
E*Trade isn't an investment for everyone, to say the least. For me, it's a long-term holding--I won't sell whether it goes to $5 or $50, as I'm confident that by the time that I need to sell my shares it's going to be much, much higher than it's current level. |
