We had the pleasure of speaking with Marc Rubinstein, author of Net Interest, a financial sector newsletter, about his essay, Party Like It’s 1999: From ETrade to eToro.

Marc writes:

Towards the end of 1999, two authors published a book called Dow 36,000. Over almost 300 pages, they laid out a view that the Dow Jones index would go on an almighty run. From an already elevated level of around 10,000 at the time of publication, they projected that the index would rally to 36,000 over the next few years. Needless to say, it didn’t.

Over 20 years later, however, we’re finally getting close. This week, the Dow broke through 33,000 for the first time, putting us within a whisker of Dow 36,000.

The current stock market rally has many features in common with 1999. Chief among them is the involvement of retail investors. Dow 36,000 was written for a retail audience all-in on the market of the late 1990s. Around 20% of US households directly owned stocks at the time, up from 15% in 1995. Their path to the market was aided by online trading platforms that offered cheap trading and an easy user interface. These platforms, operated by ETrade, Ameritrade, Charles Schwab and others, collectively picked up around 12 million new accounts in the late 1990s.

Today we are presented with a new vintage of online trading platforms. Their poster child is Robinhood, but another – eToro – this week announced that it’s going public via a SPAC merger.

Today, we’re going to look at eToro through the experience of ETrade. The outlook for ETrade looked pretty rosy in 1999. Revenues were anticipated to continue to grow as the internet revolutionised the way the public managed its money. Sadly, the journey was more painful. Is the set-up for eToro similar?

Read on or listen to our conversation (recorded on March 30, 2021):

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About This Audio Series:

MOI Global is delighted to engage in illuminating conversations on the financial sector with Marc Rubinstein, whose Net Interest newsletter we have found to be truly exceptional. Our goal is to bring you Marc’s insights into financial services businesses and trends on a regular basis, with Marc’s weekly essays serving as inspiration for our discussions.

About Marc Rubinstein:

Marc is a fellow MOI Global member, managing partner of Fordington Advisors, and author of Net Interest. He is a former analyst and hedge fund manager, most recently at Lansdowne Partners, with more than 25 years of experience in the financial sector. Marc is based in London.

About Net Interest:

Net Interest, authored by Marc Rubinstein, is a newsletter of insight and analysis from the world of finance. Enjoyed by the most senior executives and smartest investors in the industry, it casts light on this important sector in an easy-to-read style. Each post explores a theme trending in the sector. Between fintech, economics and investment cycles—there’s always something to talk about!

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