There are two types of investing - passive and active.
With passive investing, individuals deploy a buy-and-hold strategy, creating a portfolio that contains the same funds as an index, trusting that their stocks will generally rise over time. In other words, you invest, you sit back (cross your fingers), and let the market go to work. (Since 2001, a passive buy-hold-strategy of the S&P 500 would have yielded 5.7% annually). With active investing, the individual isn't trying to just keep pace with the market, they're actively (and often daily) trying to beat it.
And tastytrade, a Chicago-based online financial network, wants to kill passive investing.
"We plan to change the culture of investing," says tastytrade co-founder and co-CEO Tom Sosnoff. "Putting money in an IRA, a 401k and just waking up in 20 to 30 years hoping for the best - you learn nothing. You learn nothing about risk. It's not as effective as active investing."
For the past 6 years, tastytrade has been working to create and empower active investors through over 30 million hours of free, accessible content about trading. Tastytrade produces eight hours of live, original programming every weekday, providing financial information, investment strategies, actionable trading ideas, and more through a variety of shows such as Anatomy of a Trade, Best Practices, and Market Measures.
"We do what no one else does," says Tom. "We create active investors. We create interest in finance."
However, to date, tastytrade has been arming individuals with the knowledge and confidence to become effective do-it-yourself traders, and then "drop them off at the front door," explains Sosnoff. Tastytrade, a media company that hasn't run a single ad since its 2011 launch, has generated revenue through a marketing agreement with TD Ameritrade. (Tastytrade gets people excited about trading and then they send them to TD Ameritrade.)
But after what the company calls "a mutually beneficial and wonderful partnership" with the online broker, they've decided that rather than passing them off to another brokerage, they'd rather own the entire process, from start to finish.
That's why tastytrade launched tastyworks in January, a brand new online broker that is embedded with the company's content. The platform also has a unique $1 commission structure, a customizable watch list, and access to analytical and research functionality, making it as easy as possible for the active, DIY trader to make a trade and manage their portfolio.
With tastyworks, investors can now flow from content to technology and trading seamlessly. Tastytrade has also integrated Dough, its suite of options trading software and technology, into the new platform.
And though it may seem like a significant pivot for a media company to be getting into the brokerage space, this isn't Sosnoff's first foray in the industry In 1999, Sosnoff co-founded thinkorswim, an online trading platform and brokerage that sold to TD Ameritrade in 2009 for just over $600 million.
"We disrupted the online brokerage space with thinkorswim. Then we disrupted financial media with tastytrade. Now we're bringing it all together."
To do so, tastytrade is "getting the band back together," says Kristi Ross, co-CEO and President of tastytrade and a former CFO with thinkorswim. In addition to Sosnoff and Ross, they've brought on Scott Sheridan to be the CEO of tastyworks, a former co-founder of thinkorswim. The tastyworks management team is rounded out by Linwood Ma, CTO of tastytrade and former CTO of thinkorswim. Tastyworks is currently headquartered in the Google Chicago building, just a few blocks north of tastytrade's West Loop studios.
tastyworks officially launched on January, 3rd and plans to add futures and futures options by March 2017.
"We need to expand our tastytrade identity to a larger scale," tastytrade said in a statement, "and let our passion to help you in this revolution have a more financially secure future."
(Images via tastytrade)
