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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

#181

Post by defertoreptar »

fizzledbits wrote: post #172

Robinhood gets their revenue from margin interest lending to people who can't afford to invest but do it anyways. And also from selling the trading data to high frequency traders to front-run the Robinhood traders. The top guys at Robinhood all have HFT background and connections. Their pr message is priceless but a sham. The users are the real product, with all that we know goes with that.

Don't forget that huge pile of deposits sitting in user accounts. Banks at least pay interest for those deposits.

To be fair, the other brokerages probably do the same exact thing and get $7 on trades.

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

#182

Post by jldugger »

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…

> Index funds aren't just boring, there is something morally abhorrent

Hyperbole much? There's plenty of capitalist spirit in placing your trust in the outcomes of markets. Specialization is a perfectly rational economic decision, and requires you not specialize in other things. There's no reason to believe a medical doctor for example is going to excel at active investing, or that society would be better off if we required it.

The wonderful thing about markets is that we can all benefit from the specialization of others. Specialization (and competition) produces cheap pencils, cheap food, and even stocks that are closer to fairly valued. It is a fundamental misallocation of human capital -- I'm better off further pursuing specialization in server administration than trying to stare at stocks and newsfeeds to separate information from noise.

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

#183

Post by bigtunacan »

wmeredith wrote: post #159
bigtunacan wrote: post #112

Earlier quoted context omitted.

Amazon, Alibaba, Mercado Libre, and Netflix are good examples of reasons not to avoid individual stocks. More than 90% of my investments go into index funds and 10% into individual stocks, but if hindsight was 20/20 it would be 100% into my individual stocks and I’d be retired on my own private island today.

Hindsight IS 20/20. I think you meant if foresight was 20/20.

LOL. Indeed I did.

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

#185

Post by bigtunacan »

what_ever wrote: post #131
bigtunacan wrote: post #110

Earlier quoted context omitted.

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 w…

Thanks. I think so many people here don't understand how people use RH and quickly jump to conclusion thinking it's only "low net-worth individuals" using it. Before RH, people still invested in individual stocks and it wasn't only "low net-worth" individuals attracted by the greens and reds in the UI doing those.

I’m sure for some users the notifications can be alarming or induce bad/impulsive behavior.

I have on occasion though found them useful where I get a notification that X stock is down Y% today. Most of these have been bad market days and I’ve said, “Nice, I’m long on X and it’s on sale today so I’ll pick up a few more shares.”

So on the one hand I understand how these could lead to a rash decision from some I don’t think Robinhood is trying to get people to buy high and sell low.

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

#186

Post by betterworldb »

kylehotchkiss wrote: post #3

I can't wait to access their web/desktop version! Phone has been nice. As far as monetization goes, even if robin hood was $5-10/month it'd still be fun for a beginner investor like myself, i just dread the idea of per-trade fees on my single-stock purchases.

Web / desktop version is out in the beta. You can signup to get on the waitlist here: https://robinhood.com/#web

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

#187

Post by fizzledbits »

jldugger wrote: post #180
fizzledbits wrote: post #172

Robinhood gets their revenue from margin interest lending to people who can't afford to invest but do it anyways. And also from selling the trading data to high frequency traders to front-run the Robinhood traders. The top guys at Robinhood all have HFT background and connections. Their pr message is priceless but a sham. The users are the real product, with all that we know goes with that.

Is any of this a concern for someone looking for a place to follow a simple passive investing strategy in SP500 / AGG?

I was commenting on their business model. I don’t know if the person you described would have anything to worry about, apart from their own moral feeling about the company in general. I won’t use them, because I dislike the entire premise.

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

#188

Post by meatbundragon »

AFNobody wrote: post #114
meatbundragon wrote: post #36

Earlier quoted context omitted.

While this is a great point, the casual segment of the customer base that is being discussed would certainly not have enough awareness of this fact. At the very least, I didn't even though I do trade ETFs and large cap stocks casually...

I am sorry but "casual investors" should be doing long term buy and hold because if you can't be bothered to spend 30 minutes on research to compare brokerages, I am genuinely horrified at the idea of you doing anything other than buying and holding an index fund. Robinhood's encouragement of the instant gratification, poorly researched trades is going to end badly for many of it's customers when we enter a bear mark…

I disagree that investors' abilities to understand stocks and create portfolios should be judged by someone's willingness to find which individual brokerages offer free buy/sell of their own ETFs.

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

#189

Post by godzillabrennus »

fizzledbits wrote: post #172

Robinhood gets their revenue from margin interest lending to people who can't afford to invest but do it anyways. And also from selling the trading data to high frequency traders to front-run the Robinhood traders. The top guys at Robinhood all have HFT background and connections. Their pr message is priceless but a sham. The users are the real product, with all that we know goes with that.

Sounds like they engineered a fantastic business model.

Am I wrong? Is there downside for the typical consumer in all of this?

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

#190

Post by dmode »

Slightly off topic, but these huge rounds at Robinhood, Airtable and Doordash a few days back underscores how the Valley is still the place to be. There have been a number of posts in HN over the last few years about how another region is about to overtake SV, but the facts still don't align.
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