I thought this was an interesting post on the Motley Fool EGRP thread (which is considerably better than the EGRP Yahoo thread, no surprise there...). It was written by "Bensofar."
Anybody have any thoughts on what will happen to EGRP stock when either one or both of DLJ and Waterhouse online sites go public, as the Bloomberg article suggests they might. Ameritrade is an ant compared with Waterhouse and with all the investments at stake, you can bet that blood will flow. The question is, will EGRP be left standing with all its limbs intact?
I think it will. No doubt that E-Trade knows that it has woken the dragons and that this is going to be a big battle. This explains why E Trade has been announcing new bells and whistles every other week. If they can get new market share before the older, but bigger, boys charge onto the field, they will increase their chances of being left standing at the end. E-Trade's current advantage is that they "get it;" they understand the internet and are running full speed ahead for the future. The banks and brokerage houses haven't yet gotten it, but they are feeling the pain and with that will come tremendous creativity and competition.
Perhaps, as has been suggested, E Trade will sell to Citibank, or some other heavyweight. No doubt, that would be good for us stockholders. But if E-Trade can create a new entity, then the rewards will be immense. Let's hope that E-Trade doesn't make too many mistakes as they grow into their own powerhouse which is what it seems they are attempting to do.
One thing is clear, though, and that is that people don't like to feel uncomfortable when it comes to their money. Read the article which begins on the front page of the Jan. 28 New York Times about the number of huge financial losses which have mistakenly occured by people who didn't know what they were doing. Yes, they might deserve it, but the fact is, the big brokerage houses have used people's financial ignorance for decades and have created a system in which they have pampered and spoon fed people in order to charge them astronomical fees. And the beauty of their scheme has been to charge both for making, as well as for losing their client's money. What a great deal. And then here comes the new online brokers who very quickly spoil the party.
IMHO, I think E Trade will carve out a new niche and, as things go in the alternative internet universe, those who go first get the spoils. Look no further than AOL, Yahoo, and Ebay.
It is interesting to recall the many messages this board now gets (including my own) concerning problems with E-Trade's service. This is the weak link and one which the big brokerages have been focusing on all along. They represent credibility and comfort. They know that if you can make people comfortable people will give your their money. E-Trade might be changing the rules by allowing us all to trade cheaply, but they will lose people if it gets uncomfortable. And the big money, the money which will trickle down to shareholders, will only occur if there are masses of deposits. This isn't about who has the best idea. This is about who will make the most money. The best ideas don't always win. Online trading is here to stay. We will now and forever be able to make cheap trades. But in terms of building a company that willl grow and prosper, for that you need lots of safe and happy customers. |
