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'Flash Boys' Forces E*Trade Baby Into Retirement? [Videos]

Differing from a tangible invention, new virtual tools for traders are shaking up the financial industry. Michael Lewis' Flash Boys -- a top-selling treatise on the state of modern-day Wall Street -- is turning the stock market ecosystem on its head. For those who still think the hallowed halls of the stock exchange is still about alpha-male floor traders whaling in trading pits to 'buy' and 'sell' - think again -- for that world is officially DOA.

More than a Flash-In-The-Pan...


In place of old-school stock brokering, Flash Boys has changed up the paradigm from 'blue chip' long-term investing to "very, very" short-term frequency trading. Flash Boys are those who have excelled with their advantage of speed trading to game the system and in so doing, siphon off money at the top nearly with each and every trade.

High frequency trading [HFT] has evolved in the digital age because it can. It uses all of today's tools including algorithmic trading, shorter fiber paths, artificial intelligence and machine-formatted news feeds.

There is some murky fuzzy math involved here -- but,  former hedgefunder S. Yang attempts to clear it up some for the layman: "There was a time, when a bid was a bid, and an ask was an ask. If you liked the ask, you could hit the buy button and have a buy order confirmed instantly. Likewise, if you liked the bid, you could hit it and have a sale order confirmed instantly. That instant used to be measured in seconds or less."

According to Lewis, however, today's stock markets are rigged by traders who know how to gain a millisecond competitive edge over their rivals. Accomplished by a tidal wave of algorithmic front-running, traders with super speedy online connections use their software to react to buying and selling before others can.

So How Does This Affect E*Traders?

E*Trade is an online discount stock brokerage service that targets self-directed investors. These are not investors glued into the Flash Boy technology or mentality, but rather dedicated traders who are looking to shore up retirement funds. Previously, the site's identity was closely associated with a "talking baby." Why? Well, basically to convert the non-investor types into these dedicated investors, by showing them that online investing is so easy "even, a baby can do it."

The commercials are now iconic and recognizable to a large demographic as the result of a decade of these ads debuting year-after-year, on the Super Bowl.


How I think Flash Boys affected E*Trade's new approach in communicating with their users -- was to jolt them into the reality that their clientele had matured. On-boarding new-found investors over the last ten years or so convinced 100s of thousands they should become investors. But now seeing how the market has stepped up its game with operators such as Flash Boys, it's encumbent on E*Trade to educate their traders in a much more sophisticated manner.

Are you a "Type E"?

So out with the baby - minus the bath water - in with the new. E*Trade's latest campaign is centered around "Type E" types. Differing from the Flash Boys or Type A personality often associated with high-stressed workaholic types, E*Trade is going to lengths to show their clients they are traders of merit as well.

According to Liza Landsman, chief marketing officer at E*Trade, "there has been change in the space, with customers choosing self-directed platforms over brokerage firms. E*Trade now sees its target market less as day-traders playing the market and more as investors who might want to go it alone but are still looking for retirement account -- and tools to further their education."

And the baby, who ceremoniously quit recently, wasn't the right face for this more grown-up audience.


The new TV commercial that debuted to take the place of the baby, includes an "Epic Musical, featuring professionals from various industries crowing about how they "know a thing about an IRA," and declaring that they're "Type E."


While not striving for Flash Boy status, Type E's are nonetheless treated as more-than-casual investors -- those who've "taken the wheel" and are unwilling to let anyone else drive. Its attempt to build camaraderie amongst its clientele is a proven advertising tactic that's been successful for other products. But as admirable as that is, unless they break out a whole new set of online tools for their market to engage in, versus just "breaking into song," this out-of-the box campaign falls a little flat. There needs to be more convincing here to show that the 'Type E' descriptor isn't just another ad slogan attempt to attach to a newer icon, an adult version of the "baby" who while he or she has grown up -- lacks sufficient know-how to work with a market-in-flux.

Kevin SpaceyKevin SpaceyGiving them the benefit of doubt, perhaps the company's follow-up with award-winning actor Kevin Spacey as the firm's "Type E" spokesman will hit that nail on its proverbial head. Time will tell.

But in the meantime, we bid a fond farewell to the "baby investor" who entertained us masterfully -- all those many years!

For those who are unaware as to this "retiree's" where-abouts today -- now, having reached the ripe old age of 6 -- this toddler tycoon, who's real name is Manolo Gonzalez can be found working without a highchair and entering the 2nd Grade.  Fluent in both Spanish and English, it will be interesting over the next few years as he matures into adulthood, as to where he'll be investing all those TV residual checks - and whether he'll become a Flash Boy or a Type E?

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Ron Callari
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