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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

#421

Post by i-cjw »

fairestvalue wrote: post #339

Ummm, have y'all thought about spread costs? If you look at the spread of any of these ETF's mentioned (spread = ask px - bid px), you will notice that the spread is much smaller than if you were to sum up the spreads of each component stock. That's possible because of a mature ecosystem of ETF market makers and arbitrageurs (like Jane Street). If you buy all of the stocks individually, as it sounds like y'all's solu…

Surprised to see so many current and ex HFT/MM folks in the comments yet no mention of the fact that you don't have to cross spread to get filled. If you're lifting the far touch 100% of the time then, sure, you're going to pay the full spread - but no-one with half a brain cell does that. Unless you really think you have intraday alpha in the name (and in this case they most certainly do not) then you'll camp out on the near side or down the book and cross much less than half the time. Add into that the liquidity rebates and life just got a whole lot cheaper.

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

#422

Post by nobodywillobsrv »

I came here expecting to see how custodial and accounts stuff works. SV tech bros don't exactly have the best reputation when it comes to segregation of accounts and custodial stuff, credit etc.

Assume the model is bad and they gradually lose money and close. How does it work?

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

#423

Post by nobodywillobsrv »

wrsh07 wrote: post #25
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…

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

Adverse selection goes both ways. If PFOF leads to adverse selection against your flow then it's not win-win. You might say you are willing to trade of adverse selection up to the cost of the fees, but then you are trading a known fixed fee for an unknown stochastic penalty. And also who sets the fees?

The entire thing is adversarial and it's really just a choice of game you choose to play.

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

#425

Post by 1oooqooq »

hn_throwaway_99 wrote: post #282
1oooqooq wrote: post #247

Earlier quoted context omitted.

nonsense. there's millions of ways. one is to be upfront about it on every advertisement and service description... can't get any easier than this. and is as effective as the complicated canary shenanigans.

> one is to be upfront about it on every advertisement and service description Did you even bother reading the thread? What happens when your company gets sold, and all the old promises are thrown out the window? This has happened many times before (just ask Palmer Lucky about Facebook logins for Oculus), and that is what people are asking is preventable, and your suggestion does nothing to solve that problem.

the marketing will have to remove all promises, so customers can move out.

they get around this using platitudes, like "do no evil".

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

#426

Post by arcticbull »

matwood wrote: post #400
arcticbull wrote: post #355

Earlier quoted context omitted.

IBKR just pays you like 4-5% on idle cash, so do a few other brokerages. Don't even have to buy anything.

Sure, but you’re back to moving to a brokerage who gives a good rate. If someone doesn’t already have a brokerage then IBKR is a fine choice. SGOV works with any brokerage and is mostly state tax free as a nice bonus.

Ah gotcha.

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

#427

Post by igor47 »

late2part wrote: post #417
fairestvalue wrote: post #339

Ummm, have y'all thought about spread costs? If you look at the spread of any of these ETF's mentioned (spread = ask px - bid px), you will notice that the spread is much smaller than if you were to sum up the spreads of each component stock. That's possible because of a mature ecosystem of ETF market makers and arbitrageurs (like Jane Street). If you buy all of the stocks individually, as it sounds like y'all's solu…

What value does "Ummm" provide in your response?

It's an incasualator. It causes the response to read as more casual/conversational, and less pedantic. But I guess you wouldn't know anything about that ;-P

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

#428

Post by vpribish »

dmurray wrote: post #383
JoshTriplett wrote: post #374

You're coming into a market where most providers make much more money, and you're undercutting and selling for $1/month. $1/month is below even most cheap B2C services, and many customers are likely to want a product like this to manage a large number of assets. With what other product, service, arbitrage, float, or other mechanism do you intend to make more substantial amounts of money? Knowing what this is would he…

I'd also like to know that! I have some ideas, from less shady to more: - Payment for order flow - Interest on sweep accounts - Upsell to more profitable products (first party ads) - Payment for order flow, but structure your orders so the spread is really attractive to market makers (unfortunately you might be doing this unintentionally) - Third party ads - Sell your customers' data There's also the possibility of n…

Also collect and keep the stock lending fees

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

#429

Post by ada1981 »

munk-a wrote: post #408
ada1981 wrote: post #401

Earlier quoted context omitted.

Can someone honestly explain the downvotes for agreeing with a commenter that I’d like to understand how they handle the spread issue?

Likely due to the guidelines[1] > Comments should get more thoughtful and substantive, not less, as a topic gets more divisive. your comment didn't add anything of value to the thread. Upvoting will cause the thread to float higher in the overall discussion and increase the visibility (and thus chance of a response). Just as a note - your reply comment and even this comment itself is also against guidelines due to be…

I appreciate that.

The parent had skipped over responding and I wanted to voice that I too would be curious to know the answer.

Are you saying the best and only option is upvoting?

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

#430

Post by wrsh07 »

loeg wrote: post #411
wrsh07 wrote: post #399

Earlier quoted context omitted.

This is just noting that different brokers give different performance That doesn't really have anything to do with pfof (TD Ameritrade gives better execution and receives pfof) https://news.ycombinator.com/item?id=42378516

Presumably a market maker would pay (PFOF) slightly more to deliver slightly worse execution (keeping the spread).

Sure that sounds plausible but it's literally not what happens in practice (see the other comment I linked that discusses research on this very thing)
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