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Robinhood stock trading app confirms $110M raise at $1.3B valuation

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Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#181

Post by lend000 »

AndrewKemendo wrote: post #177
lend000 wrote: post #162

Earlier quoted context omitted.

> 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 y…

> It's bad if your core business is getting unsophisticated people making trades (bets) with credit

I would agree, if there were evidence to support that primarily unsophisticated people are buying premium. However, I doubt this is the case (I'm sure someone will put together numbers on this eventually). I'm a competent trader who avoids leverage, simply because I don't want to pay for a membership (it's not just a loan; you need a gold membership, too, which is an added barrier to entry).

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#182

Post by slimsag »

protomok wrote: post #173
pembrook wrote: post #110

Enticing 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 tr…

I use Robinhood for passive funds. VOO, VYM, UPRO, SHY, etc.

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#183

Post by Ntrails »

vivekd wrote: post #168
lend000 wrote: post #115

Earlier quoted context omitted.

Wouldn't want to enable people to make their own decisions with their money, would we? The fact that you have to make a paid account to use leverage (whereas you can trade indefinitely for free) is deterrent enough for most people who do not already actively manage their investments. I think Robinhood is doing a great service -- I just wish they would expose a better API.

As a small investor, borrowing money to invest is almost invariably a terrible, terrible idea, because any return you make on the investment will likely be cancelled out by the interest paid to borrow the money. I just looked up margin interest rates, for loans of 10 000 or less (which is what we are likely talking about with robin hood) the interest rate is Base Rate + 1.25% which is 8.50% interest. I don't know man…

Is that Base Rate something specific to them? Because it's a goddamned travesty for a pretty well secured loan.

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#184

Post by Infernal »

AndrewKemendo wrote: post #16

“But ‘how are you going to make money long-term?’ has been a question mark” Bhatt says. Gold has answered that question.” A Gold subscription lets users borrow up to double the money in their account to trade on margin with leverage Wow, so that's effectively opening up new easy to get credit vehicles for unsophisticated investors. How could that go wrong? Even if you are a professional trader you'll take a bath on m…

As someone who has looked into but not actively used Robinhood - the main benefit of the Gold subscription is for day traders. With a free account, if I decide I want to sell AAPL and buy GOOG, I have to wait 3+ days before I get the money from selling AAPL credited to my account. With Gold, they basically let you float, so you can immediately get into a new position after getting out of the previous one, without having to wait for your previous position to settle.

I believe that is far and away the primary use case for Gold.

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#185

Post by hotgloupi »

"Additionally, Robinhood earns revenue by collecting interest on the cash and securities in Robinhood accounts, much like a bank collects interest on cash deposits."

I wonder if selling (or using) data from their customer is more profitable than the Gold plan.

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#186

Post by mywittyname »

whitepoplar wrote: post #72
omarforgotpwd wrote: post #23

Earlier quoted context omitted.

Margin trading is a pretty standard feature across all brokerages. Dangerous if used ignorantly, but greatly increases you returns if used effectively.

*Dangerous if unlucky, but greatly increases your returns if lucky

With sufficient cash flow, margins aren't that dangerous, even in a downturn. For example, if you have $24,000 and invest $500/mo into an account, getting a $6,000 margin loan in january that you pay off throughout the year isn't really that dangerous.

The problem with margin trading as a retail investor is that they interest rate on the loan is ridiculous, between 6-9%. Making it almost worthless.

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#187

Post by bcohen5055 »

Infernal wrote: post #184
AndrewKemendo wrote: post #16

“But ‘how are you going to make money long-term?’ has been a question mark” Bhatt says. Gold has answered that question.” A Gold subscription lets users borrow up to double the money in their account to trade on margin with leverage Wow, so that's effectively opening up new easy to get credit vehicles for unsophisticated investors. How could that go wrong? Even if you are a professional trader you'll take a bath on m…

As someone who has looked into but not actively used Robinhood - the main benefit of the Gold subscription is for day traders. With a free account, if I decide I want to sell AAPL and buy GOOG, I have to wait 3+ days before I get the money from selling AAPL credited to my account. With Gold, they basically let you float, so you can immediately get into a new position after getting out of the previous one, without hav…

I'm a current robinhood non-gold user and they actually eliminated this restriction around 6 months ago. Now as soon as I sell a position I can buy my next with the funds from the sale.

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#188

Post by brilliantcode »

dragonwriter wrote: post #172
brilliantcode wrote: post #108

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. 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 sinc…

https://seekingalpha.com/article/4009799-lending-club-online...

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#189

Post by volkk »

vitaminbandit wrote: post #167
ojr wrote: post #164

Earlier quoted context omitted.

"Always invest what you cant afford to lose" is a very common investing advice given to beginners. You don't need and an Economics PhD to understand this concept

>"Always invest what you cant afford to lose" Is this a typo?

I don't think so. Investing (i.e long term investing where you believe in a company) is usually a legitimately safe strategy, whereas speculation is more or less gambling.

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#190

Post by sigstoat »

pembrook wrote: post #132
spelunker wrote: post #125

Earlier quoted context omitted.

Trading is how brokers make money. It shouldn't surprise you that this is Robinhood's business model. I totally agree with your investment strategy, and you can do that on Robinhood, by the way.

However the other online Brokers don't call themselves "Robinhood" and claim to be the champion of the little guy while simultaneously encouraging you into a strategy that has been proven to lose over the long run. Use the advisor (robo or human) services of any of the top online brokers and they will recommend you put your money in index funds. Also, putting together a "long term" portfolio of indexes at Robinhood a…

> Otherwise you're looking at hefty capital gains taxes to transfer when they pivot or go belly up.

you should be able to account transfer out without causing a taxable sale.

how well that will go in the event they pivot or fail and have to transfer your assets over to some backup service is of course unknown.

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