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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

#251

Post by tn135 »

hammock wrote: post #22
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…

Might be questionable for investors (although trading on margin is extremely common) but gambling seems to make a ton of money for casinos, betting parlors and lottery boards, many of which have been around for "long term." Sounds more like you have moral/personal objection.

Not to mention the whole concept of credit cards are based on that and here people do not even gamble. They spend the money with 100% certainty.

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

#252

Post by unknown_apostle »

creeble wrote: post #229

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.

Yup. Exactly this.

Some measures suggest the current bubble is even bigger than the one in 1999. Or at least more broadly carried, in the sense that in 1999 the bubble was limited to a fairly narrow range of tech stocks.

This time it's all over the place. It's not limited to a few stocks. It's not even limited to the broader stock market or to subprime credit. Today even government bonds are in a very special place.

PS: it's also very interesting that so many people here in these comments think that shaving a penny off on order flow is all there is to say about HFT.

And the comments also make me wonder about the staggering popularity of ETFs. ETFs are much bigger than in 2007. In themselves a sound idea, I do wonder how things like the 3x Inverse Synthetic Foobar ETF consisting of 99% bond meat with 1% mystery spices will fare during a real panic.

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

#253

Post by hueving »

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…

Banks get by on a long term strategy of supporting gambling. A loan to invest is the same whether it's in a small business, a house, or stocks. In fact, the first two are even riskier because they aren't liquid so they can't get out in turbulent times like they can with a margin call.

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

#254

Post by dsacco »

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…

Your research is sound and I agree with the bottom line but, in the interest of transparency, that's not a fair comparison.

"Top fund managers" are working with billions in AUM. If you have found meaningful alpha on a portfolio of $100k - $10M (or a section of capital within that range), you will have an easier time capitalizing on that strategy than a fund manager who needs to figure out how to scale a profitable strategy to billions in assets.

Difficulty in getting orders filled on one end and literally moving the price on the other are two big reasons it's far easier to find profitable strategies on relatively smaller portfolios. It's not just a comparison of the tools and skills used in institutional funds. The amount of money they are working with is an obstacle in of itself.

This is also why, incidentally, the most successful hedge funds in the world typically close their doors to outside capital and cap it at, say $10B or so.

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

#255

Post by dsacco »

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…

>Enticing millenials to "trade" individual stocks is quite possibly the most anti-Robinhood thing I can think of.

Listen, I understand that this is widespread, so I'm not targeting you specifically. But could we try not to use generalizations like "millenial", especially when they refer to vaguely defined generational boundaries?

Your point is very strong, and stands on its own without making what I interpret as an implicitly ageist assumption about a large swath of the population. Millenials are adults. Young adults, sure, but they have agency. It is no more predatory or clearly unethical to lend to them versus lending to baby boomers or gen X.

I take issue with this because you have implicitly robbed them of their agency as a group by phrasing your criticism as "Enticing millenials...". There's no reason to single them out. They may have less money as a group, yes, but there's nothing about trading on margin that makes it inherently more dangerous for millenials over any other generation.

You didn't mean to intentionally portray them this way, but you singled out a particular group because, like I said, it's ubiquitous. We should really try to curb that, in my opinion.

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

#256

Post by skylark »

supster wrote: post #61
mr_turtle wrote: post #48

Earlier quoted context omitted.

What's the long play then? Surely Robin Hood isn't absorbing the the transaction fees as a loss leader just to increase it's user base? If that's the play, any other company can emulate that.. The incentive seems to be this may cause a price war with existing brokerages.

The long play is that it actually doesn't cost significant money per trade at an institutional level. The only reason the other major brokers charge you money is because it covers their brick and mortar retail costs (e.g. Scottrade) and it adds to the bottomline (e.g. Etrade). So Robin Hood is actually just giving this surplus to the consumer instead of keeping it for themselves, and building a user base / brand in t…

But how is competing on price a business model in and of itself? Surely Etrade can do the same thing, right?

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

#257

Post by artursapek »

pembrook wrote: post #239
artursapek wrote: post #230

Earlier quoted context omitted.

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.

This comment is so wrong I don't even know where to begin.

What a condescending response. How is it wrong? Look at VFINX for example:

- VFINX is up 72% in 10 years. AMZN for example is up 1220% in the same 10 years.

- VFINX is up 72% in 5 years. XIV is up 530% in the same 5 years.

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

#258

Post by icedchai »

rtx wrote: post #237
nolok wrote: post #122

Earlier quoted context omitted.

Unless I misunderstood him, he's not complaining that people can make their own decisions with their money, aka that anyone can use this service even if they're not well versed in that field, he's complaining that Robinhood entire business model is based on pushing the very users who don't know how to use it in a sane way, to do it anyway. That will be the company's lifeline, as its way to make money. I can see the b…

Most lifestyle business have similar revenue models. We shouldn't just object against one company.

Lifestyle businesses, by definition, turn a profit. I doubt the same can be said for Robinhood.

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

#259

Post by findjashua »

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…

s/qyld/qqq/g

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

#260

Post by Steeeve »

rtx wrote: post #237
nolok wrote: post #122

Earlier quoted context omitted.

Unless I misunderstood him, he's not complaining that people can make their own decisions with their money, aka that anyone can use this service even if they're not well versed in that field, he's complaining that Robinhood entire business model is based on pushing the very users who don't know how to use it in a sane way, to do it anyway. That will be the company's lifeline, as its way to make money. I can see the b…

Most lifestyle business have similar revenue models. We shouldn't just object against one company.

The difference being that margin investing by novice investors has already led to the worst economic collapse in history.
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