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SIPC Says It Has Serious Concerns About Robinhood's New Product

bloomberg.com

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Re: SIPC Says It Has Serious Concerns About Robinhood's New Product

#101

Post by dunpeal »

eclipticplane wrote: post #85
kinkrtyavimoodh wrote: post #61

Earlier quoted context omitted.

As a user of RobinHood I have not felt any specific push for buying single stocks. A lot of people just buy index funds on RobinHood. If RH had made it more difficult to buy those compared to single stocks, your claim might have some weight...

Push notifications around a pre-defined 'watch list'? Notifications of major stock movements? Showing 'popularity' of a stock? 'Most Popular Under $25'? Gifting people free stock for referrals?

Right. It would be strange if RobinHood didn't encourage active single-stock trading, since that's how they made their money.

If all RobinHood users followed sound "buy diversified ETF and hold" investing advice, my understanding is that they'd go bankrupt.

Re: SIPC Says It Has Serious Concerns About Robinhood's New Product

#102

Post by detaro »

jackconnor wrote: post #95

It's Bloomberg reporting so they probably got it completely backwards, or made it up, or misunderstood what was told to them. Not saying they're right or wrong, i'm saying Bloomberg is a very unreliable news source, especially in tech.

Just because the company financial news is about has an app doesn't make it "tech". And here they're reporting direct, attributed statements, so it should be easy for you to explain what they "didn't understand".

Re: SIPC Says It Has Serious Concerns About Robinhood's New Product

#103

Post by acjohnson55 »

panarky wrote: post #75

Robinhood's offering is indistinguishable from a cash management account at a brokerage. Short-term deposits, check writing, debit card, interest bearing, etc. Fidelity Investments pioneered this product, and now it's available from others like Schwab. But at Fidelity, the cash management account is distinct from the brokerage account. While the brokerage account is insured by the SIPC, cash management funds are swep…

It seems like RH is taking this to the next step (at least with respect to Fidelity) by building typical checking account features around it, with parameters that are best-in-class.

Re: SIPC Says It Has Serious Concerns About Robinhood's New Product

#104

Post by all_blue_chucks »

evmar wrote: post #48
all_blue_chucks wrote: post #34

Earlier quoted context omitted.

Short term investment grade debt has a default rate of near-zero and pays more than 3%. See for yourself: https://investor.vanguard.com/etf/profile/VCSH It is entirely possible for them to safely promise a 3% account under these conditions. This is not at all like the financial crisis. It's just wrapping an investment grade bond fund in a bank account interface.

I clicked 'performance' on that page and it says 1.5% over the last five years. Am I reading it wrong?

Look at the "SEC yield." That's what it pays going forward. Returns were lower over the past five years because the Fed had lowered rates to stimulate the economy.

Re: SIPC Says It Has Serious Concerns About Robinhood's New Product

#105

Post by TeMPOraL »

wallawe wrote: post #31
caymanjim wrote: post #3

Another example of startup hubris. Much like Uber and AirBnB got started (and in many cases, continue to operate) by flouting regulations, Robinhood thinks they're being innovative, when they'll really just hoping they can get big enough that they can buy or bully their way past the rules. At least long enough to get acquired. It might work, but in this case, the people most likely to get screwed are the customers.

AirBnB and Uber are both examples of companies that were huge wins for customers/consumers. Just because they flout regulations which are often times outdated and unnecessary (re: protecting inefficient incumbents) doesn't mean they aren't doing what's good for the consumer. I agree though that Robinhood is a different story with potentially harmful consequences for unsophisticated investors looking for a safe/easy i…

> AirBnB and Uber are both examples of companies that were huge wins for customers/consumers.

And for its shareholders, so is a factory dumping heavy metals to the nearby river. And for its customers, so is a slave plantation.

You judge businesses by the treatment of all participants of an economic activity, not just the ones giving and receiving money. Uber and AirBnB are examples of companies that shit on society at large to provide better service to some small fraction of it. In a civilized world, there's no place for this, which is why it saddens me deeply that they're still around.

Re: SIPC Says It Has Serious Concerns About Robinhood's New Product

#106

Post by tomnipotent »

eclipticplane wrote: post #85
kinkrtyavimoodh wrote: post #61

Earlier quoted context omitted.

As a user of RobinHood I have not felt any specific push for buying single stocks. A lot of people just buy index funds on RobinHood. If RH had made it more difficult to buy those compared to single stocks, your claim might have some weight...

Push notifications around a pre-defined 'watch list'? Notifications of major stock movements? Showing 'popularity' of a stock? 'Most Popular Under $25'? Gifting people free stock for referrals?

I had a good laugh at this. I expect a certain level of professionalism from financial businesses, and this sort of fluff marketing / gamification makes my skin crawl... mostly because it tells you about the rest of the maturity of the organization if the product and marketing team is sending out this kind of amateur crap.

Re: SIPC Says It Has Serious Concerns About Robinhood's New Product

#107

Post by benmarten »

binarymax wrote: post #65
hn_throwaway_99 wrote: post #13

Through all of this I can't help but be reminded of the 2008 financial crisis and think "this is not going to end well." One part of that crisis was Icelandic Banks making a huge push for savings all over the UK and other parts of Europe ("IceSave") with the promise of better interest rates. When it all went belly up those savers realized these Icelandic banks were not quite the same thing as UK banks and Iceland ref…

I remember (but cannot find a citation) in ~2005/6 AIG was offering 4% saving accounts. I'm having deja vu all over again.

In Germany 5% was common at that time for savings.

Re: SIPC Says It Has Serious Concerns About Robinhood's New Product

#109

Post by kgwgk »

Matt Levine comments on this today: https://www.bloomberg.com/opinion/articles/2018-12-14/nyse-n...

"There is a lot of confusion about what Robinhood’s thing is. Delightfully, it is called “Robinhood Checking & Savings,” apparently because calling it a “checking account” or a “savings account” would come too close to implying that it is a real bank account insured by the Federal Deposit Insurance Corp., while “checking & savings” is not a thing and so does not carry that implication. A magic ampersand!"

Re: SIPC Says It Has Serious Concerns About Robinhood's New Product

#110

Post by xxpor »

BurningFrog wrote: post #93
hn_throwaway_99 wrote: post #13

Through all of this I can't help but be reminded of the 2008 financial crisis and think "this is not going to end well." One part of that crisis was Icelandic Banks making a huge push for savings all over the UK and other parts of Europe ("IceSave") with the promise of better interest rates. When it all went belly up those savers realized these Icelandic banks were not quite the same thing as UK banks and Iceland ref…

> Iceland refused to make depositors whole As I recall it, the 340,000 people of Iceland had no chance in hell of covering the enormous amounts even if they wanted to.

Edited: Iceland isn't a member of the EU, so my comment didn't make any sense.
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