Robinhood stock trading app confirms $110M raise at $1.3B valuation • Hacker News Board

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

#221

Post by [deleted] » Wed, Apr 26, 2017, 6:10 PM UTC

ojr wrote: post #164

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…

"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

[deleted]

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

#222

Post by wfunction » Wed, Apr 26, 2017, 6:11 PM UTC

jbooth wrote: post #203

ThrustVectoring wrote: post #194

Earlier quoted context omitted.

The loan is secured by the assets purchased, it's not unsecured.

They're offering 2x margin, if I read the article correctly. So it's at best 1/3 secured, and probably a lot less than that if you need to make a margin call and try to collect. The gigantic risk to Robin Hood isn't that they'll have problems collecting occasionally. They can make up for that by fiddling with their fees to come ahead in the average case. It's that some big market move busts everyone at once and they…

Question: if they do go bankrupt then you still own your stocks, right? Do customers lose anything?

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

#223

Post by appetizer » Wed, Apr 26, 2017, 6:11 PM UTC

j2bax wrote: post #214

appetizer wrote: post #201

Earlier quoted context omitted.

Unsophisticated investors already have access to 4:1 leverage in every stock broker out there, which is quadruple the money, so you don't know what you are talking about? Surprise! Robinhood is going to make revenues like a normal broker, who at this point already have mobile apps that are just as intuitive and more fully featured.

I have accounts with traditional brokers and with Robinhood. I assure you the barrier to entry with Robinhood is far lower than traditional brokers. I could definitely see this being a major concern with the potential to ruin some unsuspecting innocently curious "investors" lives.

financially naive speculators blow up their account with partially featured financial company

straight out of the onion folks.

Robinhood's gold account is still 100% less margin than other brokers and the regulations themselves allow! Yet they are getting people to pay for it! Have a laugh because it is hilarious, paying for the privilege to pay interest is the bigger article here.

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

#224

Post by guiomie » Wed, Apr 26, 2017, 6:13 PM UTC

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…

Out of my own ignorance on the subject of "buy some index funds": what happens when 50%, 75% or 90% of the market buys index funds? How will stocks be priced properly if no one is trading them directly?

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

#225

Post by mrtron » Wed, Apr 26, 2017, 6:13 PM UTC

webninja wrote: post #210

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…

I use Robinhood and NO ONE should use margin if they don't know what a Margin Call is. Having understood that, the effective yearly simple interest rate on my particular Robinhood margin (extra buying power) is only 5%/year so all I have to do is earn higher than a 6% return each year. This last year, my return rate was 14%, so that margin was worthwhile. If new to investing and you aren't sure what to invest in, I s…

It is probably helpful to explain individual investment vehicles and why it is sane for someone new to invest.

VTI is an ETF that is basically representative of the entire US market. It is somewhat like holding a little bit of everything in the US market.

If you have a bunch of cash sitting in a savings account, and instead want that cash tethered to the swings of equities market, VTI is a reasonable choice.

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

#226

Post by huac » Wed, Apr 26, 2017, 6:15 PM UTC

webninja wrote: post #215

huac wrote: post #64

Earlier quoted context omitted.

Robinhood knows that people can just buy index funds and sit (which is what I do). But this doesn't make money, so they encourage people to buy individual stocks, "whatever new Elon Musk stock is out there", and trade on leverage. To some extent they want to make Robinhood a game, rather than an investment platform.

Robinhood makes money off of uninvested capital and margin accounts, not trade commissions. So why would they care what we buy or whether we make purchases rarely or not?

Someone who trades frequently is more likely to upgrade to Robinhood Gold than somebody who buys an index fund once and forgets.

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

#227

Post by webninja » Wed, Apr 26, 2017, 6:16 PM UTC

I've been using Robinhood for the past year and made a 14% return which amounted to an extra $1500 in my pocket that I wouldn't otherwise have. There is so much negativity surrounding Robinhood here and I think it's coming from speculative people who haven't actually used Robinhood and can't assess it empirically. They charge _0_ fees. What's so anti-robinhood about that? If you're concerned about them making money off of order flows, just use limit orders. I _only_ place limit orders.

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

#228

Post by ThrustVectoring » Wed, Apr 26, 2017, 6:16 PM UTC

jbooth wrote: post #203

ThrustVectoring wrote: post #194

Earlier quoted context omitted.

The loan is secured by the assets purchased, it's not unsecured.

They're offering 2x margin, if I read the article correctly. So it's at best 1/3 secured, and probably a lot less than that if you need to make a margin call and try to collect. The gigantic risk to Robin Hood isn't that they'll have problems collecting occasionally. They can make up for that by fiddling with their fees to come ahead in the average case. It's that some big market move busts everyone at once and they…

Uhm, what? That's still fully secured. It's actually 4/3rds secured, not 1/3rds. If you have $1000 in your account and borrow $2000 to buy stocks, you've got $3000 worth of stocks that they can sell to cover a $2000 loan. Whenever this ratio goes near or below 1, they can sell the secured stocks to cover it.

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

#229

Post by creeble » Wed, Apr 26, 2017, 6:18 PM UTC

Wow. Am I the only one here that remembers that feeling of 1999, when all stocks were going up, and one could do no wrong with leverage and a Quick and Reilly account?

Good idea for Robinhood to target millennials, who definitely aren't old enough to remember.

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

#230

Post by artursapek » Wed, Apr 26, 2017, 6:20 PM UTC

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…

Buying indexes is definitely safer than individual stocks, but also leads to lower returns over the long term compared to winning stocks. Also, they only go up while the market is going up. If you're just betting on the market, might as well buy and hold something like XIV and get higher returns/pay no fee on it.