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Fractional Shares

blog.robinhood.com

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Re: Fractional Shares

#81

Post by denkmoon »

bob1029 wrote: post #39
AcerbicZero wrote: post #27

Ah, shares of shares. Through Robinhood no less. Sounds like a great plan for the platform which has had how many comically massive mistakes over the past few months? Are they going to let r/wsb leverage these 100x as well? Don't get me wrong, I love some of what they're doing....I just don't trust them with my money.

I've been with Robinhood for over 3 years and I have had zero issues with my portfolio or any features around managing my account day-to-day. The only thing that tripped me up was the transition from Apex to their own clearing house, so I had some extra paperwork to file w/ the IRS during that transition year. I see a lot of people saying things like "I don't trust Robinhood with my money". I am curious what scenario…

Enron had to submit to auditors and regulators. Lehman Brothers too.

The mere presence of extensive auditing and regulation does not mean that it is effective.

Re: Fractional Shares

#82

Post by crazygringo »

tempsy wrote: post #73
throwaway34241 wrote: post #65

Earlier quoted context omitted.

Can you expand on how index ETFs are a bubble? You say that there's wide consensus, but when I researched it the consensus seemed to be that indexing was the right strategy for most people (and even sophisticated investors like Warren Buffett have instructed his trusts to use an indexing approach). Beating the index is a zero-sum game, for every winner there must be a loser. Of course you can make educated choices ba…

If everyone just buys the index, then the underlying stocks that make up the index are propped up in a way that wouldn't be the case if that individual stock was not a part of said index. (This is not hypothetical it is actually happening)

It is hypothetical, because you're ignoring the other side of the equation: all the sophisticated investors (hedge funds etc.) who detect that stocks are temporarily propped up in some sector and will collapse, and so go short at the inflated prices... thus lowering prices.

Companies always face a reckoning point, on their individual timelines.

It's just arbitrage 101. Nothing stays mispriced forever. And the sooner the "other side" figures it out, the quicker prices correct -- so you've got to be fast. Which is exactly what sophisticated investors are.

Re: Fractional Shares

#83

Post by travisjungroth »

georgeecollins wrote: post #79
skybrian wrote: post #37

Earlier quoted context omitted.

Do we want to encourage teenagers to buy stock in individual companies? Index funds I could see.

I set up a small custodial account that my teenager can trade stocks in. Yes, I know it is smarter to invest in ETFs.. Buying an individual stock gives a kid a reason to read balance sheet, a P&L, understand what a dividend is, a share is, and so forth. Also, he learns what risk feels like, that it is really hard to outsmart the market. Better to do these things with small amounts of money. So yeah, I do want to enco…

What if he wins? A common thread among gambling addicts is a large win at a young age. It’s not that unlikely that he will beat the market during his most formative years and you will have taught him the opposite of what you intended.

Re: Fractional Shares

#84

Post by [deleted] »

pravus wrote: post #30
zymhan wrote: post #2

So, what is the actual "vehicle" with which the shares will be purchased? And is this something that exists outside of Robinhood?

Fractional shares are common when using DRIPs (Dividend ReInvestment Plans) which basically just use all dividend proceeds to purchase more shares instead of paying out in cash. Since then entire amount is used, you always get a fractional share since it would be very rare to get a dividend that is an exact multiple of the market price. My understanding is that the way this works is that the broker will generally alr…

[deleted]

Re: Fractional Shares

#85

Post by PhantomGremlin »

pravus wrote: post #30
zymhan wrote: post #2

So, what is the actual "vehicle" with which the shares will be purchased? And is this something that exists outside of Robinhood?

Fractional shares are common when using DRIPs (Dividend ReInvestment Plans) which basically just use all dividend proceeds to purchase more shares instead of paying out in cash. Since then entire amount is used, you always get a fractional share since it would be very rare to get a dividend that is an exact multiple of the market price. My understanding is that the way this works is that the broker will generally alr…

(the T+3 rule for ownership transfer)

Most countries are now T+2. The USA has been so for over two years.

https://en.wikipedia.org/wiki/T%2B2

Re: Fractional Shares

#86

Post by qwhelan »

bob1029 wrote: post #39
AcerbicZero wrote: post #27

Ah, shares of shares. Through Robinhood no less. Sounds like a great plan for the platform which has had how many comically massive mistakes over the past few months? Are they going to let r/wsb leverage these 100x as well? Don't get me wrong, I love some of what they're doing....I just don't trust them with my money.

I've been with Robinhood for over 3 years and I have had zero issues with my portfolio or any features around managing my account day-to-day. The only thing that tripped me up was the transition from Apex to their own clearing house, so I had some extra paperwork to file w/ the IRS during that transition year. I see a lot of people saying things like "I don't trust Robinhood with my money". I am curious what scenario…

>SIPC insurance up to 500K USD on all (non-crypto) investment accounts? This is on-par with the same kind of protections you get with any FDIC-insured checking or savings account.

While similar, SIPC is not "on-par" with FDIC.

With FDIC, the bank is taken over Friday afternoon and your cash is available Monday morning.

With SIPC, it could very easily be five years before you have access to your assets again.

The difference in the value of the insurance also means the regulatory scrutiny behind SIPC is far lower.

Re: Fractional Shares

#87

Post by PhantomGremlin »

Ambele wrote: post #67
kelnos wrote: post #60

Earlier quoted context omitted.

> it's easier to panic sell index funds you aren't attached to than individual stocks you're emotionally attached to. If emotions are a part of your decision, you've already lost the game. I get that humans are emotional creatures, but if you start making investment decisions based on panic and emotions, it doesn't matter if you've been buying index funds or individual stocks; you're going to perform poorly and likel…

> If emotions are a part of your decision, you're going to perform poorly. I agree. Hacker News readers are more logic based but the rest of the world is more emotional based. For most people, the emotional half of the brain dominates the logical half of the brain. I think we can agree that being invested in a diverse basket of 20+ stocks with 5% or less of the portfolio invested in each is regarded as a pretty safe…

Target will keep selling merchandise, Apple will keep selling more iPhones

Once upon a time Sears, Roebuck and Company was the country's largest retailer. Much more recently, Motorola and Blackberry sold millions of phones and Apple didn't.

individual stocks that you plan to hold forever.

Once upon a time people thought you could own the Nifty Fifty[1] stocks forever. You would probably have been better off putting your money in an index fund. E.g. what's a recent price quote on Eastman Kodak?

[1] https://en.wikipedia.org/wiki/Nifty_Fifty

Re: Fractional Shares

#88

Post by PhantomGremlin »

meritt wrote: post #50
deminature wrote: post #16

Earlier quoted context omitted.

Yes, I'm sure implementing this feature was as simple as modifying the ownership column in the database. How are dismissive, unthinking comments like this upvoted?

It was a tongue-in-check reference to the article I linked. > Your share ownership consists of just a number in a database on Schwab’s computers, and if Schwab wants to make that number floating-point that’s Schwab’s business. But let's not act like Robinhood is doing anything new, innovative or difficult here. Numerous other brokerages have offered fractional shares for the past decade.

It was a tongue-in-check reference to the article I linked.

The article was by Matt Levine. I think he's the best financial columnist ever. I think you provided a valuable link for people.

I can see why some people might downvote you, but I sure can't understand why your earlier comment got flagged.

Re: Fractional Shares

#89

Post by kgwgk »

Keloo wrote: post #43
rch wrote: post #26

Earlier quoted context omitted.

You already have BRK.B

just a small note: brk.a is different in terms of voting power. but for small investors this is probably negligible anyway.

It’s not like fractional shares are going to give you any voting rights anyway.

Re: Fractional Shares

#90

Post by tinco »

Half a decade ago I researched starting a fractional trading platform, and I gave up on the idea because I decided it was illegal.

Now in this thread people are saying multiple such platforms exist. Did I make a mistake or get something wrong? Or are they applying some kind of workaround? I can't remember why I thought it wasn't allowed.

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