Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

techcrunch.com

Post reply on HN
Print view View original

191–200 of 207 posts

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

#191

Post by Judson »

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.

I thought they stopped selling order flow, but was wrong. For those interested, here is their Q4 2017 606 Filing w/ the SEC:

https://d2ue93q3u507c2.cloudfront.net/assets/robinhood/legal...

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

#192

Post by dragonwriter »

bigtunacan wrote: post #112
jjeaff wrote: post #91

Earlier quoted context omitted.

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".

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.

Aside from the hindsight/foresight inversion, you probably mean if your foresight was 20/20, but the rest of the market had no better foresight than they actually do.

In which case, of course, you should invest entirely in the highest rate-of-return investmentd that the rest of the market currently undervalues.

The problem is people are prone to overrate their own foresight.

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

#194

Post by justonepost »

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).

Limits don't work. Market might not cross your price.

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

#195

Post by justonepost »

anilshanbhag wrote: post #40
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.

This is really speculation. There is no reliable source to confirm this. I have used Robinhood for over 6 months now and never observed the trade price deviate from what is listed on Schwab and IB. Also, for most people who trade 100-1000 shares it doesn't really matter.

50K * 0.001 is $50 dollars.

Better to just pay a flat fee and get better routing.

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

#196

Post by infinite8s »

charlesdm wrote: post #167
tysonzni wrote: post #42

Robinhood is the only one among the new batch of fintech startups that encourages active trading. Their entire UI is built to optimize for ease of trade rather than thinking in terms of portfolio objective and diversification. Contrast that to Wealthfront, Betterment, or Acorn - they're all built on the "buy and hold" philosophy. They use technology to automate allocation, tax reduction and rebalancing, while investi…

What remains to be seen is whether passive investing will also be the way to go for the next 20 years. One idea I often hear is that the more money that is being managed passively, the easier it is becomes for an active manager to "abuse" gaps in the market (i.e. when all these funds liquidate all their assets the same time, across the board -- not looking at whether you're selling Google or SmallCapX).

That's not abuse, that's a valuable price discovery mechanism. If the whole market was passive there would be no way to determine the true price of an asset.

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

#197

Post by tysonzni »

infinite8s wrote: post #196
charlesdm wrote: post #167

Earlier quoted context omitted.

What remains to be seen is whether passive investing will also be the way to go for the next 20 years. One idea I often hear is that the more money that is being managed passively, the easier it is becomes for an active manager to "abuse" gaps in the market (i.e. when all these funds liquidate all their assets the same time, across the board -- not looking at whether you're selling Google or SmallCapX).

That's not abuse, that's a valuable price discovery mechanism. If the whole market was passive there would be no way to determine the true price of an asset.

The universe of passive funds or ETFs includes those that track specific industry/sector, size, region and other factors. Even if the whole market is passive, traders could still vote on the valuation of an asset by buying/selling those funds.

If everyone is passive, price discovery would be harder but not impossible. But there will always be traders who think they can gain an edge by going active, right?

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

#198

Post by TheCoelacanth »

toss892625 wrote: post #46
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…

Reducing the free loan you provide to a bank with a checking account is good, but be very careful with leverage. IMO any leverage should be a very deliberate decision. If you buy a 30k car/tuition one day (depending on how much you have invested, this could be a lot of leverage!), and the market crashes by 50% the next day, would you be ruined? It's possible that even if the stock immediately recovers from some flash…

> I suppose this is no more risky than buying something on a credit card, then selling a stock to pay off the card after a month.

It's definitely more risky than that. With the credit card strategy your maximum loss is whatever the interest rate on the credit card is. The stock market could drop by a much larger amount.

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

#199

Post by subterfudge46 »

Robinhood is amazing. The app turned me into a saver. I stopped visiting Starbucks because I realised that I could simply buy a CLDT stock every-time I spent $20. I remember countless times when I stepped in a store and bought a stock on robinhood instead of spending money on some object.

Last year I did around 4300 transactions on Robinhood. This is unimaginable with something like Fidelity or E-Trade.

Post reply on HN