Is there a chance of losing money that is invested in RobinHood? I am not talking about trading losses -- but some thing like RobinHood going under and me losing money as a consequence of that? Are there any protections for consumers?
Robinhood stock trading app confirms $110M raise at $1.3B valuation
171–180 of 394 posts
Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation
#172Remember LendingClub which was a money lending business that touted it's machine learning KYC & AML process would automate the overhead but what happened was it just let a ton of people with non existent credit to grab money...that they will never pay back. Techcrunch, news, tv, they had it all. I'm not saying Robinhood is bad or anything but the business model and the valuation built on top of it is very questionabl…
> Remember LendingClub which was a money lending business that touted it's machine learning KYC & AML process would automate the overhead but what happened was it just let a ton of people with non existent credit to grab money...that they will never pay back.
Last I checked, Lending club still had strong returns, even after their fees, for investors (though somewhat less attractive then the figures would suggest since it is taxable as personal income rather than capital gains), and a sub-5% default rate. This characterization seems to be pure fantasy.
Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation
#173Enticing millenials to "trade" individual stocks is quite possibly the most anti- Robinhood thing I can think of. The only thing more ironic would be to encourage them to take on margin...which as it turns out is literally Robinhood's business model. 99% of users on the platform will ulimately end up participating in a direct transfer of their own wealth to a more sophisticated trader or algo (i.e. The banks and hedg…
Here's an example of how badly active funds underform passive funds:
'Given that active managers’ performance can vary based on market cycles, the newly available 15-year data tells a more stable narrative. Over the 15-year period ending Dec. 2016, 92.15% of large-cap, 95.4% of mid-cap, and 93.21% of small-cap managers trailed their respective benchmarks.' [1]
The question folks need to ask is this - Will my stock trading strategy + low (zero with Robinhood?) trading fees outperform 90%+ of the top fund managers who are using the most sophisticated investment tools available? If not, just buy index funds and spend as little as a few hours / year managing your investments :)
[1] http://us.spindices.com/documents/spiva/spiva-us-year-end-20...
Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation
#174Is there a chance of losing money that is invested in RobinHood? I am not talking about trading losses -- but some thing like RobinHood going under and me losing money as a consequence of that? Are there any protections for consumers?
Robinhood is SPIC insured upto $250,000. So you can get upto 250,000 worth of securities value back if company goes under.
Scroll down on the link https://www.robinhood.com/
Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation
#175Earlier quoted context omitted.
And why is that a bad thing? If I make a couple of $100 trades in a day and make $10, what do I care if the pros used me for liquidity? I believe the same would happen even if I was paying $7 at Fidelity to make the trades. Not trying to be argumentative, just want to make sure I understand the conversation here.
Most Robinhood customers will not reliably make more money trading every day than they would buying and holding Vanguard Index funds ($VTI is a good place to start).
Given how frequently this is said, I'm shocked that people still don't get it.
The only way you know more than analysts is:
A. be a full time analyst B. work at the company you're trading
If you're on Robinhood, you're not A. And if you're B, you're in touchy legal waters.
The average unsophisticated trader loses money vs those ETFs in even small time frames.
Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation
#176This is gambling for almost all users, and yes I used robinhood for a couple trades. Use https://stockfuse.com and you won't actually lose your money.
Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation
#177Earlier quoted context omitted.
Except it's credit, not their own money, so your naiive "how people spend their money has no consequences" attitude, doesn't hold water. That's the whole point.
> so your naiive "how people spend their money has no consequences" attitude Who said it has no consequences? People make bad decisions with money their all the time. In fact, many of the working class get their fix in real casinos, where there's no real chance of winning, even if you know what you're doing. But the parent argument is going in the direction of "people shouldn't have the freedom to use this type of pr…
But the parent argument is going in the direction of "people shouldn't have the freedom to use this type of product."
No, my comment was in the direction of: "It's bad if your core business is getting unsophisticated people making trades (bets) with credit."
It's the same reason we all know it's a bad idea to give someone a 400k mortgage on an ARM when we don't know if they can pay it back or not. Great way to find yourself in a recession.
Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation
#178Earlier quoted context omitted.
Except it's credit, not their own money, so your naiive "how people spend their money has no consequences" attitude, doesn't hold water. That's the whole point.
> so your naiive "how people spend their money has no consequences" attitude Who said it has no consequences? People make bad decisions with money their all the time. In fact, many of the working class get their fix in real casinos, where there's no real chance of winning, even if you know what you're doing. But the parent argument is going in the direction of "people shouldn't have the freedom to use this type of pr…
If you gave me a choice between running $1k through a blackjack table, or backing $1k of an unsecured loan for margin trading by a random Robinhood user, I might go for the blackjack.
Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation
#179Is there a chance of losing money that is invested in RobinHood? I am not talking about trading losses -- but some thing like RobinHood going under and me losing money as a consequence of that? Are there any protections for consumers?
Yes, there is a chance, but there are very tight regulations about the company's capital requirements that are designed to ensure you're protected. The only thing you're particularly susceptible to is outright theft/fraud on the part of Robinhood.