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Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

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Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#711

Post by kgwgk »

moscovium wrote: post #660
kgwgk wrote: post #631

https://twitter.com/AOC/status/1354833285386543105 "Committee investigators should examine any retail services freezing stock purchases [...] especially those allowing sales, but freezing purchases." Apparently she would prefer that people were blocked from selling their holdings.

Did you not read the tweet or are you just trying to misrepresent her argument? She is asking why different sets of trading rules are apply to retail and institutional investors. If retail can sell, but can't buy, who are they selling to? "We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit."

Does she or doesn't she say that the retail services allowing sales but freezing purchases are especially worth of investigation, compared to the general category of retail services freezing stock purchases?

Of course, in reality, the only services freezing stock purchases are those allowing sales but freezing purchases. Because freezing sales in addtion to purchases would be much more problematic, not less.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#712

Post by MrMan »

acdw wrote: post #389

I'm personally really pissed off because I made a Robinhood account last night to buy $10 each f AMC and GME, the first stock trading I've ever done. I just want to make some extra money so I can start a family, you know? I feel like the history of my personal financial life has been the increasing awareness that nobody with any power cares one whit about me or anyone like me.

I think one of the original messages of HN was "start a business" partly because investing in those new businesses was what Pg wanted to do for a living. why don't you embrace that message? it seems healthier than complaining about the stock market being rigged

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#713

Post by whimsicalism »

beachwood23 wrote: post #673
wyldfire wrote: post #26

Can someone help me understand Robinhood's POV? This just seems so outrageous that there must be some sane rationale that I'm not seeing. Why do Robinhood, Reddit, Discord, etc feel like they have to respond to this? Whether the investments being made are responsible or not, it doesn't seem like it should be their place to intervene. If the hedge funds over-shorted GME and WSB recognized that and traded against that…

I don't think this was Robinhood's choice. Robinhood doesn't actually execute any trades. They sell user's trade orders to Citadel, a trade executor. Citadel then buys the shares on the market, and sells them to Robinhood for a slight markup. It's how Robinhood offers trades for $0 fees. You pay pennies more per share, but don't have to spend $5 per trade. Citadel, and other trade executors, are refusing to buy share…

I'm just not really sure I understand the narratives being thrown around right now, and I'd like to think I understand the economy somewhat

Melvin Capital closed out their short position yesterday with a large loss - and Citadel helped cover that loss.

As far as I know, Citadel and Melvin Capital no longer are holding any short positions in Gamestop. So what do they have to gain, by your narrative, from suppressing the price?

Citadel is probably making bank off of this actually, like a lot of other sell-side firms.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#714

Post by cactus2093 »

lottin wrote: post #577
cactus2093 wrote: post #489

Earlier quoted context omitted.

One possible legitimate reason is the risk to Robinhood themselves. They allow margin trading and I think anybody would agree that buying GME at these crazy prices on margin is incredibly risky. If the traders can't pay, Robinhood or their bank/insurers are on the hook. Also even though the narrative here is Robinhood traders vs hedge funds, surely there are also a lot of shorts on Robinhood too, so there's more marg…

> However why not just disable margin trading on these stocks instead of shutting them off altogether? Yes... or simply increase the margin.

Well I think we're in such uncharted territory here that it would be difficult to trust any risk model, so just increasing the margin may be hard to get right.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#715

Post by alexilliamson »

beachwood23 wrote: post #673
wyldfire wrote: post #26

Can someone help me understand Robinhood's POV? This just seems so outrageous that there must be some sane rationale that I'm not seeing. Why do Robinhood, Reddit, Discord, etc feel like they have to respond to this? Whether the investments being made are responsible or not, it doesn't seem like it should be their place to intervene. If the hedge funds over-shorted GME and WSB recognized that and traded against that…

I don't think this was Robinhood's choice. Robinhood doesn't actually execute any trades. They sell user's trade orders to Citadel, a trade executor. Citadel then buys the shares on the market, and sells them to Robinhood for a slight markup. It's how Robinhood offers trades for $0 fees. You pay pennies more per share, but don't have to spend $5 per trade. Citadel, and other trade executors, are refusing to buy share…

That's interesting because Ken Griffin started Citadel and has made huge investments in Melvin. Feels sketchy.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#716

Post by kgwgk »

Ivoirians wrote: post #680
kgwgk wrote: post #631

https://twitter.com/AOC/status/1354833285386543105 "Committee investigators should examine any retail services freezing stock purchases [...] especially those allowing sales, but freezing purchases." Apparently she would prefer that people were blocked from selling their holdings.

Your comment is not a gotcha. She'd clearly prefer that stock trading not be frozen at all. Freezing purchases but not sales is a gift to short sellers because retail investors can only lower the price, which will induce more people to panic sell.

So the hypothetical broker that had frozen both would be less worth of investigation?

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#717

Post by game_the0ry »

beachwood23 wrote: post #673
wyldfire wrote: post #26

Can someone help me understand Robinhood's POV? This just seems so outrageous that there must be some sane rationale that I'm not seeing. Why do Robinhood, Reddit, Discord, etc feel like they have to respond to this? Whether the investments being made are responsible or not, it doesn't seem like it should be their place to intervene. If the hedge funds over-shorted GME and WSB recognized that and traded against that…

I don't think this was Robinhood's choice. Robinhood doesn't actually execute any trades. They sell user's trade orders to Citadel, a trade executor. Citadel then buys the shares on the market, and sells them to Robinhood for a slight markup. It's how Robinhood offers trades for $0 fees. You pay pennies more per share, but don't have to spend $5 per trade. Citadel, and other trade executors, are refusing to buy share…

Wow. Just wow. As RH user myself, I did not have a clue I was actually doing business (indirectly) with Citadel.

I'll be closing my RH account soon. For now, I'll be holding the line on GME.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#718

Post by MrMan »

RyanShook wrote: post #467

Isn't r/wallstreetbets the logical outcome of Robinhood's business strategy? When you combine free, frictionless trading with online communities I don't really see any other outcome and it will keep happening.

WSB certainly seems to have been pumped up by RH business and vice versa.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#719

Post by sparrc »

snowwrestler wrote: post #187
wyldfire wrote: post #26

Can someone help me understand Robinhood's POV? This just seems so outrageous that there must be some sane rationale that I'm not seeing. Why do Robinhood, Reddit, Discord, etc feel like they have to respond to this? Whether the investments being made are responsible or not, it doesn't seem like it should be their place to intervene. If the hedge funds over-shorted GME and WSB recognized that and traded against that…

The way to make money in a bubble like this is to sell right before the pop. At some point the word will go out that it’s over—“we won”—and everyone will rush to sell their GME and take profits. It’s not possible for all those people to succeed. Broker apps like Robinhood will be absolutely overwhelmed with sell orders, many of which will run into technical problems and/or no counter parties. A lot of people are goin…

> caused by financial firms selling a lot of crazy mortgages to people who could not afford them unless housing prices went up forever. When the crisis hit, the firms got the blame, not their customers.

This is not totally correct.

2008 was caused by banks giving out extremely risky mortgages (the banks knew they were risky mortgages) and then packaging them up into giant bundles and magically calling them AAA stable real estate investments and selling them forward to other banks/pensions/401ks.

Banks are responsible for assessing the risk on a mortgage, not the customer.

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