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Robinhood’s big gamble

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Re: Robinhood’s big gamble

#61

Post by aj7 »

Someone1234 wrote: post #21

I 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…

Fidelity gave me an EXAM on options concepts before allowing me to trade them. I made one trade, then realized it’s a casino where the sharks take money from the fish. I reasoned that options trading is a full time job to be successful.

Re: Robinhood’s big gamble

#62

Post by ruggeri »

Someone1234 wrote: post #21

I 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…

I think what you say is true, but I think the public reaction also reflects the disingenuity of Robinhood presenting itself as "democratizing finance," when in reality it seems like they are ambivalent about whether their users are investors or gamblers.

As other poster has noted, I think you have to apply on Schwab to trade options. I've never done that.

Re: Robinhood’s big gamble

#63

Post by lazide »

omegaworks wrote: post #53
JumpCrisscross wrote: post #34

Earlier quoted context omitted.

> 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 in…

>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. laughs in 2008 securities crisis

A lot of ‘08 was because it impacted the every day Joe quite a lot. If prices drop because people can’t get mortgages, and people can’t pull money out of their bank because the bank is insolvent?

Those are now people who don’t have the HELOC they though they had, or their primary asset for retirement is now worth half of what it was, or can’t or won’t use the savings available when they need it - and also the people getting laid off because other Joe’s aren’t spending money or buying houses anymore. The banks are at the center of this.

Many big banks were nationalized for awhile, Lehman was blown up, Fannie and Freddie were taken over. Not because they had more money. Rather because they were at the center of the crisis that touched assets almost every American owned - and had more money because of it.

If this only impacted folks with > $1m net worth, it would have looked a lot different.

Re: Robinhood’s big gamble

#64

Post by AdamN »

sniperjzp wrote: post #32
sithlord wrote: post #10

Earlier quoted context omitted.

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...

That's still 'free'. Every business makes money somewhere and when you're not paying money directly to that business, we generally call that 'free'.

Re: Robinhood’s big gamble

#65

Post by dehrmann »

MR4D wrote: post #5

Both. 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).

Hedge funds also spent a decade not beating the market. Remember Buffet's hedge fund bet?

https://money.cnn.com/2018/02/24/investing/warren-buffett-an...

Re: Robinhood’s big gamble

#66

Post by TuringNYC »

SmellTheGlove wrote: post #41
Someone1234 wrote: post #21

I 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…

Schwab doesn't have outages during sell-offs of very visible investments, though. Hasn't Robinhood hit the rocks pretty hard during GME and DOGE sell-offs recently? The reason I won't use them is because I don't think I'm their customer - whoever is paying for the order flow is, and I don't trust their platform to be available in the middle of turbulence. EDIT: I get it - Schwab also had visible outages. Sorry for th…

As a Schwab customer, I can confidently note there are many outages, especially on volatile market days.

Sometimes, you have no idea if an order went through. With e-trade you get a sub-second push notification for trade confirmations, but with Schwab those push notifications come minutes or hours later. Meanwhile, if the website is down, you have no idea what exposure you have.

Re: Robinhood’s big gamble

#67

Post by ullevaal »

I think democratising asset investments is a worthwhile goal. The gamifying and the fact that RobinHood makes it money from trades does lead to some strained incentives, where most people would probably be better of maximising their tax advantaged pension contributions or setting or forgetting an index fund savings plan. However, I think also direct access to small and free to stock picks is generally good, so hopefully RobinHood is able to thread the needle, and make some money also when their customers make money.

Re: Robinhood’s big gamble

#69

Post by dehrmann »

arcticfox wrote: post #45
joncp wrote: post #36

Definitely. 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…

> Crypto has never and can never be an investment Whether you like or dislike crypto, this seems false according to both the dictionary and common use definition

It's a speculative investment (or asset). Whatever you call it, not including that word is disingenuous.

Re: Robinhood’s big gamble

#70

Post by mustacheemperor »

Someone1234 wrote: post #21

I 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, I would be happy to see more of the criticism aimed at Robinhood focus on its more pointed flaws as an actual brokerage. I used it for “fun money” speculating/investing because of the easy interface, but it has repeatedly failed to transfer into my fidelity account. The transfer will succeed partially, leave a ton of margin debt in my fidelity account, and then reverse entirely in a few days. When the transfer does succeed, I still manually need to move the shares from margin holdings to real ownership because you don’t actually own the stocks you hold on robinhood. And Robinhood doesn't do much to make this process easy or well supported because they don’t want you to use another broker anyway.

During the GME debacle I decided to close my account and migrate entirely to fidelity and the transfer half-completed like described above, then failed entirely. It seems to me Robinhood was using my money to meet other obligations during a liquidity challenge.

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