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

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

#121

Post by TeMPOraL »

wallawe wrote: post #100
ticmasta wrote: post #83

Earlier quoted context omitted.

If I buy a house in a neighbourhood that is zoned single family residential, Am I an "inefficient incumbent" because I expect that over the mid-to-long term it will stay that way? These companies are not democratizing investment, accommodation, tranportation or whatever they are rent seekers that use a combination of technology, business model and rule breaking to extract a portion of every transaction. They explicit…

> If I buy a house in a neighbourhood that is zoned single family residential, Am I an "inefficient incumbent" because I expect that over the mid-to-long term it will stay that way? The incumbents I was referring to are clearly hotels and taxis. But I think it's also important to point out that I wouldn't presume to tell you who to rent to or for what duration since you own the home and it's your property. AirBnB is…

> The incumbents I was referring to are clearly hotels and taxis.

Sure, but you're forgetting about another party in the transaction: everyone else. You don't have to remember about them most of the time, because unlike Uber and AirBnB, most businesses aren't dumping externalities on non-customers.

> I think it's also important to point out that I wouldn't presume to tell you who to rent to or for what duration since you own the home and it's your property. AirBnB is merely a facilitator of that transaction.

That works well if you're the only one with a property within shouting range. Most people live (and most AirBnB activity happens) in large, organized groups. In a civilized society, you're not free to do anything you like without regard to the freedoms of others.

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

#122

Post by wuliwong »

vec wrote: post #86
Swquenzer wrote: post #58

Earlier quoted context omitted.

Idk why this was downvoted, but I would like to know as well. I feel like a know a decent amount about personal finance, and Robinhood is amazing. Primarily, I can trade stocks with zero fees. The app is easy to use. It's not outwardly pushing me to make bad decisions as far as I can tell. If there are issues on the business side, that's a separate concern(?)

Offering stock trades with zero fees is pushing you to make a bad decision. The vast, vast majority of investors should be making as few trades as is humanly possible, and the small fraction who should be making frequent trades are essentially by definition working with large enough sums of money that the brokerage fees are negligible. This isn't to say you can't make money as an individual by day trading, but it is…

I don't know. It seems like mental gymnastics to say that zero fees hurts someone without a lot of money. It sounds more like you believe that people with access to limited capital can't understand the markets as well as people with access to large amounts of capital. If you didn't believe that I think you would conclude lowering the fees for trading opens up the possibility for less wealthy people to participate in methods previously only afforded the rich.

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

#123

Post by rorykoehler »

luckydata wrote: post #29

I don't understand the infatuation silicon valley has of Robinhood. Take almost every possible bad idea about personal finance and put them in an app, you get Robinhood. The business model is also suspect, I think there's a little more that hasn't been disclosed and I suspect the chase for cash started when the crypto currency fad started deflating in a hurry. I wonder if Robinhood is hiding something bigger under th…

Theranos level fraud is much easier in a pseudoscience like finance.

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

#124

Post by jackconnor »

detaro wrote: post #118
jackconnor wrote: post #114

Earlier quoted context omitted.

I'm not going to waste my time reading anything from this garbage publication. After "The Big Hack" I realized that life was too short to read articles by sources that just make stuff up. If you want to waste your time, be my guest, but I'd rather not.

Then please don't waste your time commenting with sweeping general statements on all their submissions either. It's not like it's news for HN readers.

Why not? If someone posted something from the National Enquirer here I could point out that it's probably bullshit and should be ignored. Bloomberg is 100% exactly the same, they make up news as their source of business, and have been caught doing it many times, most recently in one of the biggest journalism scandals of 2018. So why could I call out National Enquirer here but not Bloomberg?

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

#125

Post by aakilfernandes »

I guess it depends on how you read the statue.

we protect (money with a brokerage firm) that is used for the purchase of securities

or

we protect money with a (brokerage firm that is used for the purchase of securities)

Unfortunately, due to the nature of law, there's no way to get an answer on this until it goes to the courts which will only happen if/when there's a problem.

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

#126

Post by syncsynchalt »

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.

CDs were in the 5.10% range in 2006-2008, I had a ladder of them.

Many of the institutions I had CDs with were dissolved and I was refunded the principal (without interest) by the FDIC. Compared to the losses everyone else was seeing I was more than happy with my 0% "return".

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

#127

Post by tpm »

xxpor wrote: post #110
BurningFrog wrote: post #93

Earlier quoted context omitted.

> 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.

Iceland is not a member of the EU

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

#128

Post by [deleted] »

xxpor wrote: post #110
BurningFrog wrote: post #93

Earlier quoted context omitted.

> 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.

[deleted]

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

#129

Post by kgwgk »

all_blue_chucks wrote: post #104
evmar wrote: post #48

Earlier quoted context omitted.

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.

The yield is only part of the return, one has to consider also the change in price. If interest rates go up prices will go down and the actual return will be lower than the yield.

Over the last 12 months, the price of the VCSH fund is down more than 2%. This offsets the dividends paid with the coupons received and results in flat performance.

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

#130

Post by CydeWeys »

platz wrote: post #76
evmar wrote: post #48

Earlier quoted context omitted.

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

does 'performance' include dividends?

Yes. This is a marketing website for Vanguard, so of course they want to list the highest return possible, and dividends definitely do count in performance.
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