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Robinhood stock trading app confirms $110M raise at $1.3B valuation

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Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#161

Post by replies_to_all »

colourincorrect wrote: post #76

"hey guys! lets take a model that has been proven effective by many years of fierce market competition, and disrupt it by doing for free!"

SIR, I appreaciate your contrarian attitude.

I think this model is so tempting because it has become easy to persuade investors of value with user numbers (by itself a truly meaningless metric).

People are better at gaming a system than building useful new products. If the institutions say, give me a large user base and we will give you money, the next day you will have a line a mile long with startups with HUGE user bases, because that is what they were told to do to be successful. Easiest way to do that, as you say, giving away for free what used to cost money.

Between destroying the natural world and being total sociopaths hell bent on obtaining money/power at all costs, this species is fucking sick.

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#162

Post by lend000 »

AndrewKemendo wrote: post #123
lend000 wrote: post #115

Earlier quoted context omitted.

Wouldn't want to enable people to make their own decisions with their money, would we? The fact that you have to make a paid account to use leverage (whereas you can trade indefinitely for free) is deterrent enough for most people who do not already actively manage their investments. I think Robinhood is doing a great service -- I just wish they would expose a better API.

Except it's credit, not their own money, so your naiive "how people spend their money has no consequences" attitude, doesn't hold water. That's the whole point.

> so your naiive "how people spend their money has no consequences" attitude

Who said it has no consequences? People make bad decisions with money their all the time. In fact, many of the working class get their fix in real casinos, where there's no real chance of winning, even if you know what you're doing. But the parent argument is going in the direction of "people shouldn't have the freedom to use this type of product." Instead of allowing normal people (some of whom know what they are doing) to freely engage in leveraged -- or just free -- trading, would you rather people with small portfolios get their already modest earning potential chewed away by large trading fees that make short term investing impractical? The difference is that I don't think we should be protecting people from themselves.

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#163

Post by bdonlan »

mabbo wrote: post #158
lend000 wrote: post #115

Earlier quoted context omitted.

Wouldn't want to enable people to make their own decisions with their money, would we? The fact that you have to make a paid account to use leverage (whereas you can trade indefinitely for free) is deterrent enough for most people who do not already actively manage their investments. I think Robinhood is doing a great service -- I just wish they would expose a better API.

> Wouldn't want to enable people to make their own decisions with their money, would we I think you're missing what the criticism here is. Let's say you, right now, have $10,000. I say "Hey, lend me that money so I can play the stock market with it." Would you give me the money? You know literally nothing about me. You don't know if I've ever traded a stock before. You don't know if I can ever pay you back. There's a…

Margin loans are lower risk than you may think, as they're secured by highly liquid assets that are held in custody at the broker that's lending the money. That's not to say the broker can't take a loss, but it's not as risky for the broker as you might think.

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#164

Post by ojr »

AndrewKemendo wrote: post #16

“But ‘how are you going to make money long-term?’ has been a question mark” Bhatt says. Gold has answered that question.” A Gold subscription lets users borrow up to double the money in their account to trade on margin with leverage Wow, so that's effectively opening up new easy to get credit vehicles for unsophisticated investors. How could that go wrong? Even if you are a professional trader you'll take a bath on m…

"Always invest what you cant afford to lose" is a very common investing advice given to beginners. You don't need and an Economics PhD to understand this concept

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#165

Post by TallGuyShort »

ojr wrote: post #164
AndrewKemendo wrote: post #16

“But ‘how are you going to make money long-term?’ has been a question mark” Bhatt says. Gold has answered that question.” A Gold subscription lets users borrow up to double the money in their account to trade on margin with leverage Wow, so that's effectively opening up new easy to get credit vehicles for unsophisticated investors. How could that go wrong? Even if you are a professional trader you'll take a bath on m…

"Always invest what you cant afford to lose" is a very common investing advice given to beginners. You don't need and an Economics PhD to understand this concept

Really? Because that sounds like stupid, stupid advice and searching for that advice[1] yields results for the opposite.

[1] https://duckduckgo.com/?q=always+invest+what+you+can%27t+aff...

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#166

Post by lend000 »

mabbo wrote: post #158
lend000 wrote: post #115

Earlier quoted context omitted.

Wouldn't want to enable people to make their own decisions with their money, would we? The fact that you have to make a paid account to use leverage (whereas you can trade indefinitely for free) is deterrent enough for most people who do not already actively manage their investments. I think Robinhood is doing a great service -- I just wish they would expose a better API.

> Wouldn't want to enable people to make their own decisions with their money, would we I think you're missing what the criticism here is. Let's say you, right now, have $10,000. I say "Hey, lend me that money so I can play the stock market with it." Would you give me the money? You know literally nothing about me. You don't know if I've ever traded a stock before. You don't know if I can ever pay you back. There's a…

> Robinhood is taking on a lot of risk and using that as proof that they're a profitable company.

Margin positions are typically liquidated when they go negative. At worst, the customer owes Robinhood some leftover slippage after their margin gets called. And typically, margins are called before your account goes negative.

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#167

Post by vitaminbandit »

ojr wrote: post #164
AndrewKemendo wrote: post #16

“But ‘how are you going to make money long-term?’ has been a question mark” Bhatt says. Gold has answered that question.” A Gold subscription lets users borrow up to double the money in their account to trade on margin with leverage Wow, so that's effectively opening up new easy to get credit vehicles for unsophisticated investors. How could that go wrong? Even if you are a professional trader you'll take a bath on m…

"Always invest what you cant afford to lose" is a very common investing advice given to beginners. You don't need and an Economics PhD to understand this concept

>"Always invest what you cant afford to lose"

Is this a typo?

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#168

Post by vivekd »

lend000 wrote: post #115
AndrewKemendo wrote: post #16

“But ‘how are you going to make money long-term?’ has been a question mark” Bhatt says. Gold has answered that question.” A Gold subscription lets users borrow up to double the money in their account to trade on margin with leverage Wow, so that's effectively opening up new easy to get credit vehicles for unsophisticated investors. How could that go wrong? Even if you are a professional trader you'll take a bath on m…

Wouldn't want to enable people to make their own decisions with their money, would we? The fact that you have to make a paid account to use leverage (whereas you can trade indefinitely for free) is deterrent enough for most people who do not already actively manage their investments. I think Robinhood is doing a great service -- I just wish they would expose a better API.

As a small investor, borrowing money to invest is almost invariably a terrible, terrible idea, because any return you make on the investment will likely be cancelled out by the interest paid to borrow the money.

I just looked up margin interest rates, for loans of 10 000 or less (which is what we are likely talking about with robin hood) the interest rate is Base Rate + 1.25% which is 8.50% interest. I don't know many stocks you can buy even in the best of circumstances that will get you a guaranteed return of more than 8.5%. Moral of the story - robin hoods retail investors should not engage in margin trading.

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#169

Post by koolba »

kcorbitt wrote: post #100
koolba wrote: post #58

Earlier quoted context omitted.

They don't charge commission. They do receive payments for order flow. If you don't pay back your margin they'll come after you like any other debt collector. There's nothing special about it.

Actually, if your investments fall in value to the point where it looks like your account is in danger of becoming insolvent, they'll likely immediately sell as many of your assets as it takes to make up the difference, locking in your leveraged losses. This is known as a margin call, and it's very unpleasant to be on the receiving end of one. The actual risk to the broker is minimal -- they just have to make sure to…

Exactly. They have the right to liquidate to protect themselves at any time and if it doesn't cover your margin, your still on the hook for the rest.

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#170

Post by duren »

I have a modest amount of money in Robinhood. I love the app and they way it has encouraged me to learn about markets.

I started in March of 2016. I was naïve and I made a lot of silly mistakes early on, but I was able to learn a lot of fundamentals when the stakes were low.

I view it more as a gaming app than investing — it's a supplement, not a replacement for investing and asset management.

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