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Robinhood S-1 IPO

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Re: Robinhood S-1 IPO

#271
post #90

Earlier quoted context omitted.

Index funds democratized investing. Robinhood “democratized” the worst part of investing and exposed unsophisticated investors to the instruments they are most likely to underperform on. Individual stock picking is probably worse than indexes but fine, however the incentive to day trade or trade complex derivatives is almost certainly going to hurt people far more often than a Vanguard account. It’s not a coincidence…

> Finally, the GameStop fiasco was unforgivable and only a naive fool would accept the explanation given. Citadel is the MAJORITY of Robinhood revenue and was opposite that trade. Only someone who doesn't understand how any of this works would believe these absurd conspiracy theories. 1) Citadel is one of FIVE of wholesale market markets RH use. Even if they did refuse to accept orders for GME, why wouldn't their fou…

Part of the problem is that Citadel had insight into the RH order flow before the rest of the market. Normally this wouldn’t matter but this also meant they get to see orders to buy GME went from to zero in an instant. Given their position on the other side of that trade, this advance warning (potentially) let them take that fact into account before anyone else and thus trade accordingly.

RH stopping all GME purchases was market-moving news and citadel got to know before anyone else, to the detriment of those RH users that were long GME.

Re: Robinhood S-1 IPO

#272

Earlier quoted context omitted.

CS had like $9 fee per trade before they felt the heat from RH. Which btw was fine by me since it was small potatoes if you just casually invest and hold for a year or longer. What they really democratized is incessant day-trading, otm calls on dogshit stocks etc. basically a casino pretending to be a brokerage

It was never ok. Trade fees were a gatekeeping measure to dissuade retail investors. Since RH started I have been able to build a portfolio of many single individual stocks (my own market “index fund”), some worth less than $10. This was never possible under pay per trade regime.

What's the point of investing less then 10 dollars?

Re: Robinhood S-1 IPO

#273
post #178
post #176

Earlier quoted context omitted.

Robinhood "democratized" gambling on the stock market.

Coming from a country where gambling is like a plague (Most UK high streets are identical, gambling shops are everywhere), is that any worse than gambling elsewhere? Your chances of lucking into some money seem better there than on sports.

There's a side effect where stocks are no longer tied to company performance. It gets harder to seriously invest.

Re: Robinhood S-1 IPO

#274
post #161

Earlier quoted context omitted.

I know better, and I still use Robinhood. I also use Fidelity, but their mobile and web apps suck beyond description, and used to use Scottrade, who also suck. Robinhood doesn't just look better (although that's important); it's easier to use and faster; bank transfers are WAY easier; you don't have to jump through hoops to enable options trading (which means a lot of people who shouldn't trade options now do, but it…

I feel like the only person who actually likes the Fidelity app. Sure, it's not visually attractive like Robinhood but the amount of information you get is far greater. Also the iOS app works on both my iPhone and iPad whereas Robinhood only renders the phone view on iPad. The app even has proper support for the Magic Keyboard so cursor interactions work the way they should on iPadOS. Fidelity definitely has a "boome…

I like fidelity's app and website. Making complex trades on a phone doesn't make sense I think anyway. It's like programming on a phone, if you want to do anything serious use a computer.

Re: Robinhood S-1 IPO

#275
This is incredible on many fronts and I congratulate them.

But I do need to reiterate my stance on this: they are a gambling company.

The proof is in their own words in the S1: we are a safety first company. What Fintech firm says that?

Nonetheless I'm sure they will continue to expand their product line away from gamification of day trading and into gamification of investing... A much better business.

Re: Robinhood S-1 IPO

#276
post #188

Earlier quoted context omitted.

You are making the assumption that the first 1000 people somehow had a better way to value the assets being trading than the next group that joins the trade. This is a fallacy as the market sets the prices on its own. No by efficiency I mean the spread and incorporation of more information relating to the underlying asset, making it more closely match their fair value, and the resulting tightening of the spread and r…

Are the new traders introducing more information to the market? Or are they introducing noise?

You misunderstand. The information is there, constant, regardless of how many participants are in the market.

The addition of new participants helps spread, judge and value the information, more than fewer participants, which allows the information to be better incorporated into the price, resulting in a more efficient (fair value) market. As a result, the asset becomes more liquid and "fairly priced".

There is no "real price" for assets that are market valued, only whatever the market will bare. Market efficiency is about more and more participants agreeing on the going price for an asset. While this overall global disagreement on price can never be captured completely, its state is reflected by the going price and the amount of spread (difference between ask and bid price).

A big part of efficiency is being able to ask yourself how much return can you expect if you were to sell the asset right after you bought it. High efficiency, and you can expect to be able to get your money back with high certainty. Let's use an AAPL stock as an example. If I bought on today at it's low, it would have cost me $135.76. If I wanted to sell it, its be super easy. The closing spread was ask 136.96 bid 136.60, or .36/136.60 = ~0.26%, so if I bought and sold into that market as fast as they could, that is around how much I could reasonably expect to lose. The high liquidity and small spread makes that asset easy to move at low overhead cost, hence more efficient.

Compare that to wanting to buy an asset in a much less efficient market, for example real estate. Buying is not an efficient process. Not only does it take time to close, but there are overheads in both time and money that helps slow everything down and increase costs. There are much fewer participants. Not every house is the same, but also not every house is for sale. If you buy a house, you have very low certainty that you can easily sell that house right away and get your money back completely, at least least not without some other factors (time, money) put in.

If you don't like real estate as an example, consider private equity, where one is subjected in 5, 10, 20+ year lock ins of large sums of money, to buy into slices of partnerships or joint venture funds, where really one has no idea how much their investments are valued until many years later because there is no market for what they bought until everyone gets to cash out in the future. Never mind the equity fund capital calls which make you question whether your investments have indeed gone past zero and are now negative.

Low efficiency doesn't translate into loses though, just like high efficiency doesn't translate into gains. The two are independent. Low efficiency however is rife with opportunity. There is very little chance one can sell $AAPL stock at much above the going fair market value on the exchange. The same can't be said for low efficiency real estate, where it's easier to make a living off the inefficiencies in the market e.g. flipping property to the less educated new participants in that market.

Re: Robinhood S-1 IPO

#277
post #275

This is incredible on many fronts and I congratulate them. But I do need to reiterate my stance on this: they are a gambling company. The proof is in their own words in the S1: we are a safety first company. What Fintech firm says that? Nonetheless I'm sure they will continue to expand their product line away from gamification of day trading and into gamification of investing... A much better business.

What does safety first even mean in that context?

Do they mean safety of the company and/or end user?

By danger, are they referencing the danger of losing all your money due to gambling it away? Or maybe avoiding suicides by making sure they always report correct balances?

Re: Robinhood S-1 IPO

#278

Robinhood closed my brokerage account after I did transferred out assets (via ACATS transfer, to get a signup bonus with another brokerage without realizing capital gains). A few months later I asked how to reopen the account, using the "reopen account" form in their app to generate a support ticket. Three weeks later they sent an email saying that my account was permanently closed and I should apply for a new accoun…

This shows that Robinhood is a true "tech company"!

Re: Robinhood S-1 IPO

#279
post #48

I understand that many give Robinhood crap because it is not "sophisticated enough" or because of the Gamestop fiasco. Although many startups like to claim that they are "democratizing [x]", I honestly believe they did it. I have many friends that never traded before, and after they got their Robinhood account they feel comfortable enough to do it often. Even myself, who used to only trade a couple of times a year, s…

Democratizing -investing- is a good thing. But Robinhood democratized -day trading-, i.e. gambling.

I think Wealthfront or the few other similar companies actually democratized investing.

Re: Robinhood S-1 IPO

#280
post #90

Earlier quoted context omitted.

Index funds democratized investing. Robinhood “democratized” the worst part of investing and exposed unsophisticated investors to the instruments they are most likely to underperform on. Individual stock picking is probably worse than indexes but fine, however the incentive to day trade or trade complex derivatives is almost certainly going to hurt people far more often than a Vanguard account. It’s not a coincidence…

M1, E-Trade, Trading 212, Interactive Brokers, TD Ameritrade/Schwab and WeBull halted options as well.[1] There are a few more I'm missing. I wasn't happy about it but I don't blame them. As much as people were talking about over 100% of GME shorted, I can't imagine how much margin on top of margin people were trading while there options had yet to be settled. If anything the issue should be how long it takes a trade…

I don't know the exact situation with all of them, but at least Robinhood and WeBull both occurred due to reliance on Apex Clearinghouse
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