I would love ve to understand what kind of user data they sell to what kind of clients and how those clients use it. Feels to me they might have opened up a can of worms that was kept shut or may be it already happened before too.
Robinhood’s big gamble
31–40 of 156 posts
Re: Robinhood’s big gamble
#32The internet makes risky behavior more accessible by very nature of connectivity. You can talk to someone on the other side of the world with much less friction. Similarly, a fintech company like Robinhood decided to make stock trading more modern and reduce the barrier to entry. Granted, this wasn't really a big change in accessibility if you wanted to trade stocks. One could simply goto Fidelity ore other brokers a…
Although robinhood's app was pretty revolutionary, I think their real "innovation" was removing the cost of trades, basically forced the entire market to remove that. Before, it would cost 4.99+ to execute a trade, so if you were not buying significant amounts that could EASILY eat up a lot of profits.
It’s looks like free but it isn’t, RH makes money by selling trading requests to high frequency trading firms like Citadel, which buy/sell before the actual order in a better position so they can earn a penny from selling to or buying from you. The more transactions, the more they earn.
- https://fortune.com/2020/07/08/robinhood-makes-millions-sell...
Re: Robinhood’s big gamble
#33The internet makes risky behavior more accessible by very nature of connectivity. You can talk to someone on the other side of the world with much less friction. Similarly, a fintech company like Robinhood decided to make stock trading more modern and reduce the barrier to entry. Granted, this wasn't really a big change in accessibility if you wanted to trade stocks. One could simply goto Fidelity ore other brokers a…
All the annoying emojis and push notifications talking to me like I’m an ignorant child trading stocks (“HOORAY!! YOU GOT DIVIDEND HIGH FIVE”) is what made me realize this app wasn’t for me.
I guess that’s exactly what to expect when you apply that SV-type growth hacker PMs to a trading platform.
Re: Robinhood’s big gamble
#34Both. But then again, Hedge funds for rich people also encourage risky behavior (leveraging up their models, as imperfect as they are from time to time is definitely risky).
The basis of US securities law is that rich people ("accredited investors") know enough to be responsible to take risks. Whereas poor people are too stupid to make risky investments without turning into degenerate gamblers. A lot of debates about financial regulation basically come down to whether this is a good principle or not. Too many times, both sides are arguing at cross purposes, because one implicitly assumes…
> rich people ("accredited investors") know enough to be responsible to take risks
This is a straw man.
The real argument: someone with more money is less likely to become destitute as a result of a bad investment. Also: someone with more money is less likely to become a political problem that shuts down the market, or a drain on the public purse, when they lose money.
When it comes to private investments, someone investing e.g. $10k cannot afford to do legal diligence. They are also unlikely to unilaterally pursue someone who sued them in court. That almost guarantees they’ll be the sucker in the long run.
Re: Robinhood’s big gamble
#35Both. But then again, Hedge funds for rich people also encourage risky behavior (leveraging up their models, as imperfect as they are from time to time is definitely risky).
The basis of US securities law is that rich people ("accredited investors") know enough to be responsible to take risks. Whereas poor people are too stupid to make risky investments without turning into degenerate gamblers. A lot of debates about financial regulation basically come down to whether this is a good principle or not. Too many times, both sides are arguing at cross purposes, because one implicitly assumes…
>Whereas poor people are too stupid
I get the point you are trying to make, but in the world of stock trading, I'm definitely poor. However, I'm not stupid. I am smart enough to know that the game is rigged for those in-the-know. Much like the poker adage "if you can't tell how the sucker is after $shortTimeInterval, you're the sucker".
>make risky investments without turning into degenerate gamblers.
It seems to me that this is exactly what they want. Does having a gambling problem equate to stupidity?
Re: Robinhood’s big gamble
#36Definitely. Here's a couple of things that hit me in the face when I use RH:
1) You open the app and the first view is the one-day graph with the bottom lopped off of the y-axis. This encourages day trading and reacting to tiny fluctuations in the market. If they want to encourage investing over gambling, they'd show you the long-term graph of your portfolio. Or maybe skip the graph and take me to the fundamentals.
2) They use the word "investments" to refer to crypto holdings. Crypto has never and can never be an investment, but calling it that subtly emboldens users to trade in it without understanding the risks.
Re: Robinhood’s big gamble
#37Articles like this strike me as FUD no matter how hard i try and read them another way. "Risk" is such a wide spectrum when it comes to financial investments. Just look at the crypto crash today, and there are hundreds of billions invested there still. Robinhood giving younger people access to options is hardly a doomsday risk scenario in my mind. Robinhood may well be responsible for a generation gaining investment…
Or they end up spending the next 10-20 years paying off margin and credit card lines they used to invest in high risk assets.
This guy literally maxed out credit cards and bought doge on margin. https://www.nytimes.com/2021/05/14/technology/hes-a-dogecoin...
Re: Robinhood’s big gamble
#38Last time I checked on Robinhood (and maybe they've changed it since then), when you want to buy options on their app, their UI gives you two options: "I think the stock is going to go up" and "I think the stock is going to go down."
Say what you will about "democratizing" finance, but even if you think enabling retail investors to buy options is a laudable goal, surely they should at least know what a "put" and a "call" is? (The point being options are complicated to understand, and if you don't even know their names, you probably don't understand how they work. And if you don't understand how they work, maybe you shouldn't be buying them.)
I feel like a lot of the arguments I see in favor of "democratizing finance" could be applied to a company making some incredibly harmful drug. Ok, maybe we shouldn't make it illegal for companies to produce or sell that substance, but surely we can all agree that company is actively doing harm to its customers? And we don't need to pretend that the company is "democratizing" chemical consumption.
Re: Robinhood’s big gamble
#39I have a Schwab brokerage account, until recently I could trade OTCs and can still trade warrants and futures. These are riskier securities than common stock. None of which is possible on RH as far as I know. When I created my Schwab account I received and was offered no specific training, and largely learned how to trade on YT, Investopedia, and articles. My point is this: RH has become the media's favorite whipping…
Yes, but Robinhood have taken actions which purposefully harmed its users in order to benefit their corporate customers(Citadel).
https://www.independent.co.uk/news/business/robinhood-gamest...
Re: Robinhood’s big gamble
#40> Tenev acknowledged some early mistakes. “I’m the first to admit, our compliance procedures, especially in those early years, were the compliance procedures of a growing company,” he said.
I hate so much that this is such a typical startup path. Talk about a euphemism.