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An Update on Market Volatility

blog.robinhood.com

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Re: An Update on Market Volatility

#71

Post by simonbarker87 »

2bitencryption wrote: post #33
gmaster1440 wrote: post #7

We're in a bubble that's being used instrumentally in a game of chicken between average joe with RH account and hedge funds on their short positions. There's more to gain from this because of the social aspect (social change and reform), but also more to lose (bubble bursting on the average citizen that has more to lose personally than a fund). I'm obviously not cheering for the funds here, but I do worry for people…

I can't help but facepalm that people are genuinely encouraging one another to buy a stock that is so obviously overvalued, and then hold it at that price as long as possible... there are not many guarantees in trading, but that is a guarantee to lose money. and because it's under the guise of "sticking it to the man" people have become even less rational about their money. so when the stock eventually corrects to wh…

The vast majority know what they are doing here, I took a tiny fraction of my money and bought in - less than I would spend on a family meal out. I assume I lost it but it’s fun to have some skin in the game for the ride. Some people are putting silly amounts in but they know they’re not investing based on market fundamentals, they want in on the ride and they know they can loose it all.

The issue here is the clear protections/options in place for hedge funds that they can use when they feel a squeeze but absolutely no protection for average joe investor when these guys try to short an otherwise viable business going through a rough patch.

GameStop and Blackberry are in the middle of a turn around, shorting them and then telling the market they are failing is unethical and if they feel a bit of pain at the moment then good.

Re: An Update on Market Volatility

#72

Post by aneemzic »

Jtsummers wrote: post #35
DiabloD3 wrote: post #21

Earlier quoted context omitted.

How are they going to deal with the fact half of their reviews on Google Play are 1 star, and their average is now 1.x star? Google isn't going to bend over backwards for them to delete legitimate user reviews.

Android isn't the largest share of smart phone users in the US, and it's still 5 stars on the iOS app store.

Robinhood is only available in the US.

Re: An Update on Market Volatility

#73

Post by Someone1234 »

EpicEng wrote: post #45
Someone1234 wrote: post #26

Earlier quoted context omitted.

Likely no margin at all. Maybe even to the point of cash needing to clear into your account (from previous trades/ACH transfers) before you can buy these stocks. Maybe limits/ban on selling of options where the loss can be unlimited (as opposed to buying where the limit is the option's contract price).

They literally barred everyone from buying under any circumstance.

Huh? Read the linked article. We're discussing what they could mean by "Limited" tomorrow.

Re: An Update on Market Volatility

#74

Post by DennisP »

amluto wrote: post #57
DennisP wrote: post #30

Earlier quoted context omitted.

It was blocked in Robinhood's UI, but on the back end the hedge funds could trade at will. And the hedge funds had to buy a lot of stock to cover their shorts, so it was handy to get the retail buyers out of the way.

I would be rather surprised if there are serious hedge funds that buy stock using Robinhood’s backend.

It's not really Robinhood's backend, they outsource their order execution to Citadel.

Re: An Update on Market Volatility

#75

Post by dcolkitt »

Ozzie_osman wrote: post #43

This is extremely suspect. If you take my money, and give me a share, in theory I should be the only one exposed to a loss (assuming no leverage). Unless you're doing something else with my money or my shares. I'm sure many people are buying on leverage, but that doesn't explain why they can't just limit margin buying vs preventing any purchase of the stock.

Shares in the US take 3 days to settle. Technically when you buy a share, and it shows up in your account you don’t have actually own it. The broker is only showing you what you expect to receive.

Same for selling a share. Cash from the proceeds will show up in your account, but the broker hasn’t actually received that money from the settlement. You can trade with that cash, only because the broker is extending you credit.

This is why you can’t trade more than once every three days in an IRA. Tax exempt accounts can’t be used as collateral for loans.

Re: An Update on Market Volatility

#76

Post by gmaster1440 »

dcolkitt wrote: post #46
gmaster1440 wrote: post #7

We're in a bubble that's being used instrumentally in a game of chicken between average joe with RH account and hedge funds on their short positions. There's more to gain from this because of the social aspect (social change and reform), but also more to lose (bubble bursting on the average citizen that has more to lose personally than a fund). I'm obviously not cheering for the funds here, but I do worry for people…

> The social movement is honorable I’m gonna disagree. The entire “social movement” seems to be little more than the same tired old cliches and hysterics about “speculators”. The main grievance is basically that short selling is bad. Despite academic finance, finding again and again that short selling meaningfully improves price efficiency and protects ordinary investors from bubbles and mania.[1][2] Again and again…

The part that is "honorable" about the social movement, for me at least, is that the sheer exposure of the shenanigans that wall street carries out, coupled with the challenging of status quo power structures (institutional vs. retail, special accredited status vs. joe on RH), has the potential to lead to general reform and positive changes.

I think you're too quick to defend short selling as purely good, just as everyone else is too quick to decry it as pure evil. There's a middle ground here that's better for everyone, and a public dialectic on the scale we're seeing now is honorable and potentially effective, in my opinion.

Re: An Update on Market Volatility

#78

Post by Miner49er »

EwanToo wrote: post #41

As the post says, "We stand in support of our customers". People who buy and sell stock on Robinhood don't pay them anything, it's the market makers that pay them. In this case, the adage is true "You're not the customer, you're the product"...

They do make money off of some people who buy and sell stocks in the form of their Robinhood Gold subscription ($5 a month) and margin (2.5% interest).

Re: An Update on Market Volatility

#80

Post by Cd00d »

I'm honestly confused. I'm seeing a lot of rage in these threads. More than I'd expect. I understand not liking the hedge funds, and wanting to "stick it to the man" in some way, but it seems like more is going on here.

Nobody is buying GME long at $400. The price is crazy. GameStop's business is selling used hard copies and leaning into customer dissatisfaction.

It's a clear bubble and people are going to be hurt when it pops. There should be some consumer protections, IMHO, because a bunch of people are amping up a price for lulz and hopes of timing things right, but not everyone can win that pyramid scheme.

What am I missing that is leading to the rage I'm seeing?

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