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Morgan Stanley to Buy E-Trade for $13B

nytimes.com

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Re: Morgan Stanley to Buy E-Trade for $13B

#31

Post by basch »

lotsofpulp wrote: post #28
basch wrote: post #19

Earlier quoted context omitted.

this is a good explanation too, and from a local. https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone... The writing was on the wall for E-Trade. Banking is in an ebb of consolidation. E-Trade and TD Ameritrade had to sell once Interactive Brokers / Schwab started that game of dropping commission. They didnt add enough other value besides stock trading. They are a component to a larger banking suite. I have…

> Banking is in an ebb of consolidation. All businesses are consolidating due to economies of scale and low marginal costs from automation and computing power. > I am somewhat surprised nobody offers an abstracted savings account, that handles 401k, IRA, HSA, paying rent and bills, and access to credit. There are numerous differing laws for each kind of account and required disclosures. You also can’t have joint tax…

>All businesses are consolidating

And a lack of trust busting. Government deregulation, cheap cash, big exits.

>There are numerous differing laws for each kind

Thats why I said an abstraction. All the underlying accounts exist, but are hidden behind a layer. You can peak in and see individual balances, but thats not how the data is presented to you. You dont interact with it and make decisions based on the components. You set parameters, percentages, and targets, and it autobalances the rest. It would need to be able to tap into employer 401K's to make holistic decisions, doing something like blooom combined with automatic tax efficient fund placement. Automatic output of tax documents.

Automatic HSA tagging. Scan and digitize receipts. Maybe even a more advanced "invest the hsa, keep track of the receipts, set targets for optimal reimbursement (potentially years down the road.)" There is so much innovation space left on the consumer experience side of banking.

Like Personal Capital, I have to think Credit Karma is an attractive buy as well, getting into life management: a bank that does your taxes for you, that comparison shops your auto insurance. Personal Capital, Credit Karma, M1, Blooom, Angieslist, HomeAdvisor, and TrueCar would be a really slick bundle if some VC wanted to make an Office 365/AdobeCloud of life management.

Re: Morgan Stanley to Buy E-Trade for $13B

#32

Post by evanpw »

frockington1 wrote: post #17
thebiglebrewski wrote: post #4

Aw man, I just got moved from Capital One 360 Investing to E-Trade. Now I'll have to move to Morgan Stanley? Any way to just transfer my sh*t from E-Trade to Robinhood without just selling and re-buying, incurring a change in tax status? Seems Robinhood has unfortunately sunset that option...

Robinhood has terrible order execution. I switched to TDA after getting sick of limit orders executing nowhere near my limit price. Market orders were abysmal as well

Limit orders can only execute at the limit price or better. Are you saying that you were getting better prices than you expected, or am I completely misreading this?

Re: Morgan Stanley to Buy E-Trade for $13B

#33

Post by StarDucks »

frockington1 wrote: post #22
markvdb wrote: post #7

Earlier quoted context omitted.

There was a somewhat revealing interview by the people behind Flatex, a big discount broker from Germany [0]. Dutch source, do use a translator https://www.tijd.be/markten-live/nieuws/algemeen/nieuwe-eige... "Is it easier for a pan European company to keep big US competition like Robin Hood and Ameritrade out? Niehage: 'The companies you name are very badly positioned for Europe. Their economic model is based on two…

With 0% interest rates in Europe, do you think this will encourage large savers to get their money invested? I think the idea of negative interest rates is absurd however it might encourage Europeans to invest more money versus stashing in savings accounts

This is really going to end up biting everyone in the ass though.

What happens when we have another market crash and everyone is broke because they put money they would have saved into investments instead and now they have no safety net?

Re: Morgan Stanley to Buy E-Trade for $13B

#34

Post by cactus2093 »

frockington1 wrote: post #29
omarhaneef wrote: post #23

Earlier quoted context omitted.

You are right in that Chase, BofA, Citi and the like have a pretty large head start, but this is just the first innings. I can't even imagine the coming disruptions and ideas in the space. Partnering with Apple -- or Google, which I am sure people have and will -- seems like the right way to get into the space since the mobile phone is the key platform at the moment.

I haven't used apple pay since touch-less cards came out. It'll be interesting to see how they pivot to something beyond pure convenience. I highly doubt the target consumer cares about security. It'll also be interesting to see how far tech companies are willing to partner given increased regulation and scrutiny when finance is involved

Huh, so the friction for you is the actual swipe or chip read? To me the benefit of Apple Pay is not bringing your wallet everywhere, or not taking it out if you already have your phone in your hand.

Re: Morgan Stanley to Buy E-Trade for $13B

#35

Post by BurningFrog »

StarDucks wrote: post #33
frockington1 wrote: post #22

Earlier quoted context omitted.

With 0% interest rates in Europe, do you think this will encourage large savers to get their money invested? I think the idea of negative interest rates is absurd however it might encourage Europeans to invest more money versus stashing in savings accounts

This is really going to end up biting everyone in the ass though. What happens when we have another market crash and everyone is broke because they put money they would have saved into investments instead and now they have no safety net?

I don't understand negative interest rates at all, but surely something is deeply broken behind this, and it will crash in one spectacular way or another.

Re: Morgan Stanley to Buy E-Trade for $13B

#36

Post by sparkling »

omarhaneef wrote: post #10

I rely on Matt Levine to explain, more clearly than I could, how brokerages make money ("The Trades Will Be Free Now"): https://www.bloomberg.com/opinion/articles/2019-10-02/the-tr... Let me highlight a key passage: "Even this understates the change, because the actual way that stock brokers work today is that you keep some cash in your brokerage account to fund potential trades, and the broker earns interest on that…

> you keep some cash in your brokerage account to fund potential trades, and the broker earns interest on that cash

What if the US joins the negative/penalty-interest club like the Eurozone countries?

Re: Morgan Stanley to Buy E-Trade for $13B

#37

Post by sparkling »

markvdb wrote: post #7
ethbro wrote: post #3

With the move to $0 order fees for online brokerages, not surprised to see more tie-ups. Even running the business at break-even, MS gets to market their other products to all E-Trade's customers. That said, what's the current economic model for independent online brokerages? Sell order flow? Rate arbitrage off uninvested assets?

There was a somewhat revealing interview by the people behind Flatex, a big discount broker from Germany [0]. Dutch source, do use a translator https://www.tijd.be/markten-live/nieuws/algemeen/nieuwe-eige... "Is it easier for a pan European company to keep big US competition like Robin Hood and Ameritrade out? Niehage: 'The companies you name are very badly positioned for Europe. Their economic model is based on two…

Not just zero interest, but also negative interest. Some Brokers in Germany (e.g. Flatex) are already charging a -0.5% interest rate on unspent EUR cash sitting around in trading accounts.

Re: Morgan Stanley to Buy E-Trade for $13B

#38

Post by lotsofpulp »

StarDucks wrote: post #33
frockington1 wrote: post #22

Earlier quoted context omitted.

With 0% interest rates in Europe, do you think this will encourage large savers to get their money invested? I think the idea of negative interest rates is absurd however it might encourage Europeans to invest more money versus stashing in savings accounts

This is really going to end up biting everyone in the ass though. What happens when we have another market crash and everyone is broke because they put money they would have saved into investments instead and now they have no safety net?

Government props up equity values again, especially since everyone is invested in them. People with savings in cash lose via loss of value of currency, just like last time.

Re: Morgan Stanley to Buy E-Trade for $13B

#39

Post by thebiglebrewski »

basch wrote: post #30
thebiglebrewski wrote: post #4

Aw man, I just got moved from Capital One 360 Investing to E-Trade. Now I'll have to move to Morgan Stanley? Any way to just transfer my sh*t from E-Trade to Robinhood without just selling and re-buying, incurring a change in tax status? Seems Robinhood has unfortunately sunset that option...

outside of the flashy app, is there really anything Robinhood does better than Schwab or Fidelity? And in the realm of newcomers, M1 offers a better feature set.

My other holdings are on there now...I started on Capital One then went to Robinhood. More about consolidation for me

Re: Morgan Stanley to Buy E-Trade for $13B

#40

Post by throwawayhhakdl »

omarhaneef wrote: post #10

I rely on Matt Levine to explain, more clearly than I could, how brokerages make money ("The Trades Will Be Free Now"): https://www.bloomberg.com/opinion/articles/2019-10-02/the-tr... Let me highlight a key passage: "Even this understates the change, because the actual way that stock brokers work today is that you keep some cash in your brokerage account to fund potential trades, and the broker earns interest on that…

It seems probable that the more boring finance is, the more momentum mainstream equities have, and the more irrational it becomes.

If everybody pours their money into a us equity index every month, the value of us stocks will go up, absent of any perceived change in value.

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