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Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

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Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#171

Post by jacobr1 »

chasebank wrote: post #64
hn_throwaway_99 wrote: post #16

I saw the "Your Money is Secure" section, but after things like the Synapse fiasco, I would like to get confirmation from you. It says my money would be SIPC insured, which means if anything goes missing (obviously not through loss of equity value, but through missing funds or a ledger bug), I get my money back, up to the SIPC limit, right? I just want to ensure this isn't the same situation with fintechs that say yo…

IIRC, FDIC only covers the deposits if the underlying bank fails, not the fintec layer built on top of it. Please correct me if I’m wrong.

So how does it work now with bank fraud or technical issues? Ignore the fintech layer for a moment, just consider a bank like Chase or Wells Fargo. If their mobile app causes an erroneous transfer, or the backend removes money from your account or maybe doesn't give you the expected interest amount your saving account due to a bug ... what is the recourse? For a reputable company, even if their support is a hassle, they'll probably make you whole eventually. But presume they don't address the issue or repeatedly have widespread issues, what then? Do banking regulators step in? Does the public just need to rely on torts and threat of a suit or bad press?

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#173

Post by dehrmann »

wbl wrote: post #165
dayone1 wrote: post #11

1) are you going to sell your trade flow to Citadel / market makers like Robinhood and your competitors do? That's the dirty secret way of making money that you seem to have completely excluded. The reality is that adds up to substantial "invisible" fees that the investor has no transparency over because you sell your trade flows to them and they make a higher than normal spread. And the whole "doesn't matter if we s…

The reason people pay for trade flow is the same reason they sit at the table of drunks when playing poker.

It's slightly different. With poker, you play with drunks because they make mistakes. With order flow, you want trades from small fish who don't have any special knowledge so you market make and not be taken advantage of, yourself.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#174

Post by jjmaxwell4 »

sockaddr wrote: post #172

It's a red flag whenever I see an unclickable, unbrowsable, unverifiable "what people are saying" section. Even on the scammiest sites selling you trash on YouTube you'll see the same fake reviews. I immediately distrust places that do this.

Interesting - how can we make this more believable? Link to their LinkedIns?

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#175

Post by TeaBrain »

wbl wrote: post #165
dayone1 wrote: post #11

1) are you going to sell your trade flow to Citadel / market makers like Robinhood and your competitors do? That's the dirty secret way of making money that you seem to have completely excluded. The reality is that adds up to substantial "invisible" fees that the investor has no transparency over because you sell your trade flows to them and they make a higher than normal spread. And the whole "doesn't matter if we s…

The reason people pay for trade flow is the same reason they sit at the table of drunks when playing poker.

It's more like paying for the privilege of operating a monopoly on poker tables, with the guarantee that the rake will be kept low, so that the operator is not competing with other entities for the customers' rake. A market maker's competition to collect the spread is with other market makers, just like a casino's main competition to collect the customer's rake would be a different casino.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#177

Post by Hasz »

One of the things you can easily do with your approach is to offer "soft shorting". Essentially, one of the biggest issues with normal short positions is that downside is basically unlimited. Plenty of shorts have been wiped out in this very, very long bull market. Soft shorting, imo, is just discluding a particular stock from your index. No insane downside, less active, but still a bet against a company.

I want the option for an index of SP500, minus exposure to $TICKER. You approach could very easily facilitate that with how you will buy.

This can be an "active" component of an otherwise heavy bet on indexing.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#178

Post by dehrmann »

carbocation wrote: post #6

FZROX gives me 0% fees, can be bought in my retirement accounts, and is attached to a company with something like $1 trillion AUM. The latter gives me faith that it will still be around next year. I appreciate that the 0% fee options are limited, but personally I’d rather deal with 0.03% fees than entrust my money to a small shop. Especially when the reason to do so is not some trading edge, but saving a small amount…

How does FZROX make money? Loss leader for Fidelity? Improved economies of scale?

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#179

Post by tippytippytango »

hn_throwaway_99 wrote: post #104
runako wrote: post #73

Earlier quoted context omitted.

This from the site feels reassuring: "Your funds are held in your name at Apex Clearing, one of the largest US Custodians holding over $114B in funds." The "in your name" part is specifically what I was looking for.

Yeah, FWIW I think their disclosures look good, but I want some explicit reassurance. I want to ensure "in your name" is not the same thing as "for benefit of". The thing that actually gives me the most reassurance is that they say definitively that they are a Registered Investment Advisor. In the Synapse situation, all the regulatory agencies were essentially saying "not my problem" because Synapse itself wasn't cov…

Fintech needs a lot more regulation if people are having to worrying about this kind of nuance to engage with the business.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#180

Post by gdudeman »

Services like this can be very, very difficult to leave.

Be aware that if you are doing direct tax indexing with tax loss harvesting, you are increasing your tax liability in the future.

If you invest in direct indexing here, you have three choices if they tack on fees or you are unhappy with their service: 1. Take a random assortment of 300+ stocks and watch your portfolio become unbalanced over time 2. Liquidate your portfolio and up worse off than you would have with an ETF 3. Stick with it and pay

If they go out of business, you are stuck with the random assortment.

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