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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

#181

Post by freeone3000 »

jacobr1 wrote: post #171
chasebank wrote: post #64

Earlier quoted context omitted.

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, t…

The consumer finance protection bureau is your best bet. Banking regulators will also get involved for patterns of conduct, but this can take years.

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

#182

Post by xxpor »

shenoybr wrote: post #107

For a large, highly liquid ETF like SPY, it’s easy to rapidly unwind a position at a very tight spread. How does Double’s approach—directly holding the individual underlying securities—compare in terms of market liquidity and transaction costs, especially if I need to quickly liquidate my portfolio or adjust my positions?

Is that really a concern for anything in the S&P 500? The underlying concern is valid, but for this specific example it seems like a best case scenario for avoiding that problem.

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

#184

Post by freeone3000 »

highwaylights wrote: post #99
taway789aaa6 wrote: post #49

Earlier quoted context omitted.

> PFOF and excessive off-exchange trading persist because so many trading platforms rely on the revenue it generates, essentially productizing their clients. Defenders of PFOF have claimed that retail brokers who route to high-speed traders (in exchange for PFOF) provide better price execution for investors and that it’s a net positive, despite creating an inherent misalignment between these platforms and their custo…

This. It seems very much like that bogus stat that HR departments were peddling 20 years ago about how they only hire the top X% of people because they reject (100-X)% applicants - it tells you nothing about the quality in the gap. These systems don't have to actively attempt to front-run you or pro-actively make bad trades, they can just optimize for deal flow, which is enough to cause the customer to get a sub-opti…

You’re getting a price as good or better than if you had routed it through the backing exchange directly. National Bid or Best Offer continues to be the rule.

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

#185

Post by dmoy »

paxys wrote: post #156

I'm curious about how direct indexing impacts tax filing. You mentioned generating short term/long term capital gains numbers, which is fine, but what about all the different transactions? Won't someone using your service have to enter all of them manually on their return?

So I have zero enthusiasm for direct indexing, and there's effectively no chance I'm gonna use this product (or any other direct indexing company)[1], but

The tax filing thing should be a non-issue. Yes you'll probably get a 1099-B with like a gazillion entries. But, assuming this is done normally, all your holdings will be covered stocks, and all the trades will show up as reported to the IRS in box 12. Then you'll be able to just summary entry with IRS 8949 box A/D, entering like literally two lines, and you're set.

It sounds bad but it won't (I'M GUESSING!) be bad for tax filing headaches - two lines, same as any other broker.

Yea I don't like Apex and they've fucked up a couple things for me before, but they should get this part right.

And even if they don't...

Say they don't report basis to the IRS, you can still enter summary, and just physically mail the IRS your 1099-B (even if you efile), and it'll still be okay without too much work.

[1] my complaints stem mostly from portability. With a ~0.03% fee ETF, I can go to any broker in the future and still deal with it. If for whatever reason I want to stop working with , now I'm stuck dealing with thousands of individual holdings. If I was operating with large enough amounts that I could literally transfer to a different broker (IBKR) and hoist the remains into a creation unit of VTI or whatever, sure. But that's increments of $30M each, so ... lol not for people like me.

Or maybe in the future there's enough direct indexer services that they solve portability at increments smaller than . Then maybe yea, idk.

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

#186

Post by dmoy »

ramon156 wrote: post #50
taway789aaa6 wrote: post #41

Earlier quoted context omitted.

Ah yes, the old "we'll buy stocks for you and then turn around and lend them out to short sellers that actively want you to lose money. Promise we care about you!" I do not trust any institution that makes money off of lending MY shares out to predatory short-sellers who's sole purpose is to decrease the value of MY shares.

Sorry if this sounds uninformed, but what is the alternative? Even the bank and pensions gamble with your money, its how they move. I wish it wasn't the case either

Vanguard doesn't make money off of short term lending.

They do it, but the proceeds go back to the individual funds (helps boost index tracking performance).

Fidelity and Schwab both take a cut. I forget beyond that, I guess IBKR does stuff.

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

#187

Post by gdudeman »

UncleMeat wrote: post #130
Workaccount2 wrote: post #128

Earlier quoted context omitted.

I mean, $12/yr is not a lot, but if the platform is geared for long term investing and not trading, I'd imagine that in any given month 95%+ of accounts are doing nothing but sitting static and handing over $1.

Even if there are no trading costs, 12/y gets you one modest developer salary for every 10,000 customers. How big is the addressable market here?

Wealthfront has struggled to grow with a 0.25% fee - so $25 annually for every $10,000 deposited.

Marketing and operations account for a lot!

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

#188

Post by dehrmann »

> I think Robinhood has proved that you can build a strong business by getting rid of an industry wide cost

Pushing legacy(?) discount brokers to zero fee trades is their greatest contribution to the industry, but their business and success has been positioning investment products more like gambling. I don't have the data, but I suspect way more Robinhood users traded options than at Fidelity or Schwab.

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

#190

Post by Anon1096 »

taway789aaa6 wrote: post #49
wrsh07 wrote: post #25

Earlier quoted context omitted.

Pfof is woefully misunderstood In general, citadel wants to pay to trade with retail investors because it knows it isn't going to face adverse selection. So it will give them tighter bid/ask ratios (this is better for the customer) than they would get if they were trading in the open market, citadel isn't going to get hosed by one of them (because there's no adverse selection) It's win win win

> PFOF and excessive off-exchange trading persist because so many trading platforms rely on the revenue it generates, essentially productizing their clients. Defenders of PFOF have claimed that retail brokers who route to high-speed traders (in exchange for PFOF) provide better price execution for investors and that it’s a net positive, despite creating an inherent misalignment between these platforms and their custo…

There is nothing in that statement that actually shows negative effects of PFOF.

> creating an inherent misalignment between these platforms and their customers

is just speculative harm, and as to the other part about preventing risky trading - this is literally what Robinhood et al customers want!

Meanwhile PFOF actually does have proven benefits in that it reduces spread for retail investors.

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