Robinhood and How to Lose Money • Hacker News Board

Re: Robinhood and How to Lose Money

#201

Post by Swannie » Tue, Jul 21, 2020, 2:12 PM UTC

newen wrote: post #138

NovemberWhiskey wrote: post #104

Earlier quoted context omitted.

> but most of their money is in their companies, stocks, stock options, tax havens, etc. That is not "hoarding cash" - keeping your net worth under the mattress or in a savings account is hoarding cash. Perhaps, at the margin, a money market account.

But when people colloquially say that wealth people are hoarding cash, they mean what the comment you're replying to is saying and not the keeping cash under the mattress thing. More commonly, people say hoarding wealth.

"Hoarding cash" means exactly what it sounds like - people being overly attached to cash in the safe/under the mattress/in "high interest" savings accounts.

This has been its use for a long time in any publication talking about money.

I know when you say "hoard wealth" you really mean not spend their wealth, because I'm not really sure how you "hoard wealth", as being wealthy basically means you've got stores of valuable assets... or a hoard if you will.

The two phrases are definitely not used interchangeably.

Re: Robinhood and How to Lose Money

#202

Post by zigzaggy » Tue, Jul 21, 2020, 3:45 PM UTC

dbancajas wrote: post #200

zigzaggy wrote: post #198

Earlier quoted context omitted.

P.S. It’s not “luck” for a small time swing trader to make a little money. Its something you do every day, using math, psychology, and timing on companies carefully selected for their fundamentals. The market is a large, slow moving entity that constantly shows its hand. A small timer can make money. Will it scale? I don’t know. I’ve been steadily increasing my account so ask again in 5 years. Admittedly, there are d…

Are you doing things like bankroll management? measuring your risk of ruin? Sharpe ratio? if you are not tracking how legit your upswing/downswing is then I think are doing a disservice to yourself.

Yes, I have developed a risk management plan that address like bankroll management and risk of ruin. After the big drop in Dec 2018, I learned a whole lot about hedging and diversification. I’ve recently been learning to quantify that stuff with metrics like Sharpe Ratio etc.

Re: Robinhood and How to Lose Money

#203

Post by WalterBright » Tue, Jul 21, 2020, 8:37 PM UTC

abduhl wrote: post #197

WalterBright wrote: post #185

Earlier quoted context omitted.

I never really understood the "rebalancing" thing. It requires selling your winners. One thing about winners - they tend to keep winning! Some people call it "locking in your gains". I call it "minimizing your returns".

That’s weird - I call it “letting it ride” and “never leaving a hot table.” Gambling is a word used to describe anything beyond your own acceptable risk tolerance.

My definition is more mathematical:

gambling - where the odds are against you

investing - where the odds are in your favor

Re: Robinhood and How to Lose Money

#204

Post by mav3rick » Wed, Jul 22, 2020, 7:08 AM UTC

marketgod wrote: post #187

mav3rick wrote: post #153

Earlier quoted context omitted.

Trading for regular people isn't supposed to be some thrill seeking sport. Millions of dollars are spent on wall street to get "an edge". You really think you can do better ?

This is the mentality that needs to be checked. All those people trade huge money they don't care about some tiny trader moving $100k per trade. So yes you can do better as you have less capital to invest.

That makes no sense ? They're not actively trying to crush individuals, they just have more resources to access information before you.

Re: Robinhood and How to Lose Money

#205

Post by mam2 » Wed, Jul 22, 2020, 8:54 AM UTC

mav3rick wrote: post #204

marketgod wrote: post #187

Earlier quoted context omitted.

This is the mentality that needs to be checked. All those people trade huge money they don't care about some tiny trader moving $100k per trade. So yes you can do better as you have less capital to invest.

That makes no sense ? They're not actively trying to crush individuals, they just have more resources to access information before you.

they only focus on automatic trades.. you can spend time analyzing penny stocks for example

Re: Robinhood and How to Lose Money

#206

Post by kiplkipl » Wed, Jul 22, 2020, 2:18 PM UTC

WalterBright wrote: post #168

kiplkipl wrote: post #147

Earlier quoted context omitted.

Sure, but he didn't say those, he said S&P 500. It seems like weird American exceptionalism that the internet repeatedly recommends only investing in one nation's index when that would be laughable if you heard a Japanese, Chinese, or German person saying to do the same with their national index.

It's not that weird. Look at historical returns for the S&P 500 vs European indices. Besides, quite a bit of the S&P 500 consists of global companies.

Look at the Nikkei until 1990

Re: Robinhood and How to Lose Money

#207

Post by kiplkipl » Wed, Jul 22, 2020, 2:20 PM UTC

asdfadsfgfdda wrote: post #163

kiplkipl wrote: post #147

Earlier quoted context omitted.

Sure, but he didn't say those, he said S&P 500. It seems like weird American exceptionalism that the internet repeatedly recommends only investing in one nation's index when that would be laughable if you heard a Japanese, Chinese, or German person saying to do the same with their national index.

1. The market cap of SP500 companies is ~30 trillion dollars, significantly larger than the entire stock markets in Japan, China, and Germany combined. 2. SP500 companies earn ~40% of revenue from outside the United States

All those companies have the single point of failure in the policies of the US government.

Re: Robinhood and How to Lose Money

#208

Post by totalZero » Sat, Jul 25, 2020, 2:59 AM UTC

NovemberWhiskey wrote: post #128

totalZero wrote: post #116

Earlier quoted context omitted.

Their platform has had outages during periods of extreme market volatility, and they allow unsophisticated traders to take option risk that they may not readily understand. /r/wallstreetbets doesn't have any fiduciary responsibility to anyone. RH does.

Is RH actually acting as an investment adviser in these transactions, or just a discount brokerage? If the latter, generally not a fiduciary, I think?

You are correct. I should have used the term "suitability."

What I was trying to communicate is that RH could be liable in a situation where it approves people for margin or L2 options accounts who have no business accessing those kinds of products. RH may benefit from increased order flow, but is not permitted to cultivate order flow that is clearly inappropriate for its clients.

Re: Robinhood and How to Lose Money

#209

Post by cs702 » Tue, Jul 28, 2020, 4:38 PM UTC

JumpCrisscross wrote: post #41

hftrader998 wrote: post #34

I work in the industry and these kind of articles are always full of bad information about order routing. * Robinhood order flow is informed and toxic like all other brokerages. Taking the opposing side of all Robinhood trades would cause a broker-dealer to lose all of their capital very quickly. * The "bad prices" the "novices" are trading at, are in fact, the same market price that all participants trade at (at or…

> Taking the opposing side of all Robinhood trades would cause a broker-dealer to lose all of their capital very quickly Why? This is literally the definition of order flow purchasing and market making. Flow amidst spreads creates profits. The non-cynical explanation for Robinhood’s flow being attractive is in the law of large numbers. Robinhood’s trades are tiny. That means buying their flow gives one lots of small,…

Also, as the OP believes, Robinhood's flow is being induced, i.e., manufactured by Silicon-Valley-style maximization of user engagement. User engagement is the raw material necessary for creating as much order flow as possible for sale to Wall Street firms. Order flow from engaged users is the product.