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Stock trade app Robinhood raising at $5B+, up 4X in a year

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Re: Stock trade app Robinhood raising at $5B+, up 4X in a year

#21

Post by vikascoder »

dguo wrote: post #19

I appreciate the zero commission trading, but at the same time, I'm worried about the attitude towards "investing" that they promote. Most people should arguably be putting their money into index funds and holding for the long term[1], not picking individual stocks and following price movements on a daily basis. I wouldn't criticize anyone for speculating (i.e. gambling) with money they can afford to lose. I've done…

That's a good thought but zero commision doesnt really change the investment attitude that much apart from the fact that it makes very low value plays possible. There are tons of people having the same speculative investment behaviour on both sides of the line especially on larger bets. It's the smaller bets that Robinhood makes possible. I would also argue that Robinhood is a great playground to learn trading at minimal cost. I have tons of freinds with 500 dollar portfolios playing around and learning the ropes. This was seldom attractive with web based serious accounts. In the end it's all about discipline and eventually Robinhood users reach the same investment mindset as regular account players very soon.

Re: Stock trade app Robinhood raising at $5B+, up 4X in a year

#22

Post by [deleted] »

vikascoder wrote: post #21
dguo wrote: post #19

I appreciate the zero commission trading, but at the same time, I'm worried about the attitude towards "investing" that they promote. Most people should arguably be putting their money into index funds and holding for the long term[1], not picking individual stocks and following price movements on a daily basis. I wouldn't criticize anyone for speculating (i.e. gambling) with money they can afford to lose. I've done…

That's a good thought but zero commision doesnt really change the investment attitude that much apart from the fact that it makes very low value plays possible. There are tons of people having the same speculative investment behaviour on both sides of the line especially on larger bets. It's the smaller bets that Robinhood makes possible. I would also argue that Robinhood is a great playground to learn trading at min…

[deleted]

Re: Stock trade app Robinhood raising at $5B+, up 4X in a year

#23

Post by lewisl9029 »

asdsa5325 wrote: post #17

Crypto trading is the least notable reason why they are valued so high. Real reasons: 1) Large number of users 2) Large number of younger users (Millennials love Robinhood) 3) High amount of use per user (due to no fees) They are still a growth company. If they add IRAs (they said they would soon), Website (currently in closed beta), Options (currently in closed beta), and OTC (not sure if they will), then they'll li…

After using Schwab for both my banking and investments for more than a year now, I'm convinced that the most under-appreciated killer feature for a brokerage is actually cash management (i.e. a checking account you can pay bills from).

Managing both my banking and investments at Schwab allows me to keep $0 in my checking account, and make use of their overdraft transfer feature to debit my investment account whenever I make a purchase or bill payment from it. If there's insufficient cash in my investment account at the time of the debit, I have the option to cover the remaining amount with margin borrowing, which usually ends up costing cents in interest since I generally sell a few shares to cover for it in the same day (trades take 2 days to settle though, so some interest will still accrue). I feel that's a tiny price to pay for the ability to keep myself fully invested as much of the time as possible, and practically speaking, I rarely ever have to resort to margin borrowing anyways since I time my bills to match my direct deposits (which go directly into my investment account).

Essentially this means I only have 1 account to worry about to manage all my finances, and don't have to juggle money around between a checking account for spending and investment account for growth. This might not sound like it'd make much of a difference, but I honestly can't imagine ever going back to managing my finances the old fashioned way with multiple accounts. Needless to say, I can't see myself switching to a new brokerage that doesn't also offer cash management features of the same caliber (and AFAIK, Robinhood doesn't, but I'd love to be corrected).

Re: Stock trade app Robinhood raising at $5B+, up 4X in a year

#24

Post by ozmbie »

dguo wrote: post #19

I appreciate the zero commission trading, but at the same time, I'm worried about the attitude towards "investing" that they promote. Most people should arguably be putting their money into index funds and holding for the long term[1], not picking individual stocks and following price movements on a daily basis. I wouldn't criticize anyone for speculating (i.e. gambling) with money they can afford to lose. I've done…

The whole software/startup approach is currently based on user growth which relies on retention, trigger, actions, and rewards. Long-term investments don’t fit that model so there is no incentive for them to encourage that form of user behaviour.

Re: Stock trade app Robinhood raising at $5B+, up 4X in a year

#25

Post by AdenFlorian »

dguo wrote: post #19

I appreciate the zero commission trading, but at the same time, I'm worried about the attitude towards "investing" that they promote. Most people should arguably be putting their money into index funds and holding for the long term[1], not picking individual stocks and following price movements on a daily basis. I wouldn't criticize anyone for speculating (i.e. gambling) with money they can afford to lose. I've done…

Have you seen the vanguard ETFs in Robinhood? Would those be just as good as using the funds directly with vanguard?

Re: Stock trade app Robinhood raising at $5B+, up 4X in a year

#26

Post by wgerard »

dguo wrote: post #19

I appreciate the zero commission trading, but at the same time, I'm worried about the attitude towards "investing" that they promote. Most people should arguably be putting their money into index funds and holding for the long term[1], not picking individual stocks and following price movements on a daily basis. I wouldn't criticize anyone for speculating (i.e. gambling) with money they can afford to lose. I've done…

> Most people should arguably be putting their money into index funds and holding for the long term

I think Robinhood is great for that! Zero commission means you can afford to buy small amounts without worrying about fees eating into your principal too much.

You can put in $250 every pay period and buy a share of $SPY without losing ~3% to fees.

With commissions involved you'd want to wait until you could afford a larger trade, at which point you've lost time in the market.

Re: Stock trade app Robinhood raising at $5B+, up 4X in a year

#27

Post by justonepost »

What people don’t realize is that these 0$ trading commissions just make it up in their routing of the transactions. You’re not going to get the best price.

Use interactive brokers if you want a good price. Flat fee is higher but the trade routes are great.

Re: Stock trade app Robinhood raising at $5B+, up 4X in a year

#28

Post by astrange »

AdenFlorian wrote: post #25
dguo wrote: post #19

I appreciate the zero commission trading, but at the same time, I'm worried about the attitude towards "investing" that they promote. Most people should arguably be putting their money into index funds and holding for the long term[1], not picking individual stocks and following price movements on a daily basis. I wouldn't criticize anyone for speculating (i.e. gambling) with money they can afford to lose. I've done…

Have you seen the vanguard ETFs in Robinhood? Would those be just as good as using the funds directly with vanguard?

Yes, better because the minimum is $0 not $10,000.

It's not as good as Betterment/Wealthfront/Hedgeable because you can't rebalance, reinvest dividends, or get fractional shares.

Re: Stock trade app Robinhood raising at $5B+, up 4X in a year

#29

Post by zazpowered »

lewisl9029 wrote: post #23
asdsa5325 wrote: post #17

Crypto trading is the least notable reason why they are valued so high. Real reasons: 1) Large number of users 2) Large number of younger users (Millennials love Robinhood) 3) High amount of use per user (due to no fees) They are still a growth company. If they add IRAs (they said they would soon), Website (currently in closed beta), Options (currently in closed beta), and OTC (not sure if they will), then they'll li…

After using Schwab for both my banking and investments for more than a year now, I'm convinced that the most under-appreciated killer feature for a brokerage is actually cash management (i.e. a checking account you can pay bills from). Managing both my banking and investments at Schwab allows me to keep $0 in my checking account, and make use of their overdraft transfer feature to debit my investment account whenever…

Bank of America basically has this with Merill Edge and you also get free trades if you have over $50k

Re: Stock trade app Robinhood raising at $5B+, up 4X in a year

#30

Post by bcherny »

justonepost wrote: post #27

What people don’t realize is that these 0$ trading commissions just make it up in their routing of the transactions. You’re not going to get the best price. Use interactive brokers if you want a good price. Flat fee is higher but the trade routes are great.

I mean, average portfolio size for Robinhood users is probably in the $1k-10k range. How much does your 22 year old cousin care whether she pays $325.60 or $325.62 for a share of TSLA? For individuals it’s negligible, but for the HFT firms whose kickbacks make up most of Robinhood’s revenue, this adds up.
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