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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

#101

Post by 2trill2spill »

jjeaff wrote: post #91
wgerard wrote: post #59

Earlier quoted context omitted.

> My concern is that overall, the product and marketing seem to be geared towards speculative, short-term trading. When I first signed up, the app was recommending that I check out stocks like Apple, Netflix, and Snapchat, not index funds. There's a broad spectrum of public companies obviously, but it's hard to see $AAPL as speculative in the same sense that people call penny stocks or cryptocurrencies speculative (i…

Washington Mutual, Bear Stearns, Lehman Brothers, General Motors, Fannie Mae, Freddie Mac are all good examples of why you should avoid individual stocks, even if they are "blue chip".

Depends on when you bought them of course. I bought FNMA(Fannie Mae) in 2010 and it turned out pretty nicely.

But yes most people are better off buying index funds. That's where most of my money goes.

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

#102

Post by wocram »

Blackthorn wrote: post #87
nicholas73 wrote: post #18

Earlier quoted context omitted.

But is their NBBO worse than other firms (worse routing options)?

That's literally a contradiction. Look up what NBBO actually means.

It's actually more complicated, nbbo governs quotes but there are a few other things that affect your actual trade price such as exchange fees and price improvement.

For example, every exchange can have the same quote, but a different liquidity fee.

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

#103

Post by luckydata »

dguo wrote: post #94
dlp211 wrote: post #80

Earlier quoted context omitted.

Betterment, where you pay an extra quarter percent to buy Vanguard funds.

That's better than the alternative of not investing at all because Vanguard is not user-friendly. And I know that's possible because I have friends who were in that situation. If you sign up with Vanguard, you still have to pick which fund(s) to buy. If you don't know anything about investing, that can be a daunting task. With Betterment, the only decision you have to make is the percentage split for stocks vs. bonds…

Have you ran the math on how much that "user friendly" layer is costing you? I adore nice UIs, but I love even more keeping my money. Vanguard is really not that hard to use, and for how often you need to mess with it I don't think it's worth to spend more just to have prettier graphics.

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

#104

Post by [deleted] »

logicallee wrote: post #70
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…

Index funds aren't just boring, there is something morally abhorrent about simply investing in everything that has done well enough to be in an index fund. At that rate, why not invest in government bonds, given that the government gets whatever share it wants of literally every penny that goes through commerce in any capacity? If you want security, why invest in anything other than the government? I admire people fo…

[deleted]

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

#105

Post by lewisl9029 »

ThrustVectoring wrote: post #90
lewisl9029 wrote: post #23

Earlier quoted context omitted.

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 think the ideal cash management setup is to get a rewards checking account without a debit card usage requirement (harder than it sounds to find), direct deposit your paychecks into that, have a 1-2 month cash buffer there, and invest the extra through ACH pulls out of that. If your portfolio is large, having a month of expenses earning 1.75% or whatever risk-free is likely a small improvement. If your portfolio is…

> I think the ideal cash management setup is to get a rewards checking account without a debit card usage requirement (harder than it sounds to find), direct deposit your paychecks into that, have a 1-2 month cash buffer there, and invest the extra through ACH pulls out of that.

This is pretty much exactly what I used to do, but the user experience of managing cash from my investment account directly is dramatically better than having to juggle cash between different accounts through ACH, in my experience. Even if I didn't value staying fully invested as much as possible, I'd probably still choose to keep those extra few months of expenses as cash in my investment account just for that experience alone. Though admittedly Schwab wouldn't be the best choice for that usage pattern, because their interest rates for cash are rather pathetic.

> FWIW, if you have access to credit cards, you should pretty much always use a credit card rather than a debit card.

Agreed. The only things I pay for with debit directly are things that won't let me use a credit card, like for rent.

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

#106

Post by astrange »

tanderson92 wrote: post #58
astrange wrote: post #28

Earlier quoted context omitted.

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.

You can rebalance and reinvest dividends at Vanguard.

> You can rebalance and reinvest dividends at Vanguard.

Right. I mean you can't do this on Robinhood.

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

#107

Post by jnordwick »

SEJeff wrote: post #52
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.

And this is what limit orders are for. Disclaimer: I'm a robinhood user, who also works for a large high frequency trading firm. You're spot on (well that and robinhood gold is how they really make their money).

I used to work with the founders, Vlad and Bijou. The are smart and very entrepreneurial guys.

I actually assumed they were selling order flow. They have a ton of dumb money that many firms would die to interact with.

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

#108

Post by dguo »

luckydata wrote: post #103
dguo wrote: post #94

Earlier quoted context omitted.

That's better than the alternative of not investing at all because Vanguard is not user-friendly. And I know that's possible because I have friends who were in that situation. If you sign up with Vanguard, you still have to pick which fund(s) to buy. If you don't know anything about investing, that can be a daunting task. With Betterment, the only decision you have to make is the percentage split for stocks vs. bonds…

Have you ran the math on how much that "user friendly" layer is costing you? I adore nice UIs, but I love even more keeping my money. Vanguard is really not that hard to use, and for how often you need to mess with it I don't think it's worth to spend more just to have prettier graphics.

I have both Betterment and Vanguard accounts. I haven't bothered to consolidate yet because Betterment is trying to add value to justify the fee with features like tax loss harvesting, and I haven't decided if it's worth it or not.

With regards to my friends though, my priority was to get them to invest in the first place, and the user friendliness of Betterment helped a lot.

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

#109

Post by tysonzni »

dlp211 wrote: post #80
dguo wrote: post #64

Earlier quoted context omitted.

The Vanguard website/experience is definitely not that user-friendly/modern. That's the main reason I usually recommend Betterment to my friends instead.

Betterment, where you pay an extra quarter percent to buy Vanguard funds.

You pay an extra quarter percent to 1) not have to think about allocation and risk under-diversfication, and 2) commit to the "buy and hold" strategy since its withdrawal process is more cumbersome than normal trading.

I think for most people this actually ends up producing better long term returns.

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

#110

Post by bigtunacan »

siruncledrew wrote: post #97
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 why the $0 commission is such a key feature. They know people enjoy the emotional high of seeing the green numbers in their account when they open the app. This isn't a tool for high net-worth individuals, people that want "traditional" (Vanguard, Wealthfront, Schwab) wealth management investing with long-term planning, or advanced traders looking for Bloomberg terminal-esque features. This is designed to allo…

I’m probably not the average Robinhood user, but I was already putting about $50k/year into index funds for retirement.

So rather than putting even more in these I wanted to research and invest directly in a handful of stocks long term. I used to use Scottrade for this. That’s not too bad $7/trade ($14/round-trip).

If I’m making a sizable enough investment that won’t matter too much. But what if I only had $24 this week? I could buy one share of Ford on Scott-trade, but then I’m upside down until the price doubles (e.g. forever upside down).

With Robinhood I can make buys no matter how small the purchase.

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