Robinhood and How to Lose Money

But they do; sure, they spend heaps on shit like houses and cars and parties and vacations or whatever other hobbies they have, but most of their money is in their companies, stocks, stock options, tax havens, etc. At some point they reach a critical mass where no matter how much they splurge, they will never see their wealth decline. At best the companies / stocks they own will lose some value, but they will NEVER feel that in their wallet.

And some will set up a charity, but people like Bill Gates have never spent a significant portion of their wealth on that. Again though, that may be a logistical problem - they can't spend money fast enough whilst not splurging it.

Of course, the solution is simple; have the companies pay their staff better. Or give the staff stocks themselves, to be force-bought by the employer when they leave / get fired, and have it pay out dividends monthly to stipend their base income. This gives the employees representation in the board of directors as well, which is much needed in the modern capitalist system.

I love Robinhood as a product (simple, easy to use) but agree it’s advantages also can lead to recklessness.

For me, I simply delete the mobile app for my phone and use another app to set price alerts. This prevents me from overtrading and obsessing over the markets everyday.

"Informed" in his context means based on new research/news/information, implying that the market is more likely than not to subsequently move in the direction of the trade.

A "toxic" position is one that has a high chance of moving against the holder. Taking the opposite side to informed trades might be toxic, but taking the opposite side to the first buy trade in a series of a hundred by a big mutual fund company who decided they like a stock is definitely toxic because they will continue moving the price higher with each trade -- so the brokerage doesn't want to keep these short positions on their own books but source them in the market.

Based on my limited experience, you enter during the bull market, make some easy wins, and start wanting to bet more and more because winning feels so easy. I could totally feel this process when I bought a few option calls that over a few months made 10x. That felt fantastic at first but shortly after I noticed that I started to blame myself for not taking more risk because on the hindsight, it felt so obvious that the price would go up. The market knowledge aside, psychological state is another thing that needs to be kept under control not to let yourself slip into the gambling state. I wouldn't be surprised if the online echo chambers that are set around particular stocks make people unreasonably confident and make them want to take more risk.

> In stock market you're not playing against other people, including the "pros".

In one short sentence, you showed why people are hating on RH.

When you buy or sell a stock (or option or whatever), there is a counterparty to your trade. That person is making the trade because, essentially (in an oversimplified way), they believe the opposite of what you believe regarding the value of the underlying stock. One of you will be wrong. You are precisely "playing against other people", because without those other people, there will be no market.

> If you pick well, then it doesn't really matter if other people (including "pros") pick the same company or not because there's enough future growth for everybody.

While correct, this is shortsighted, and it is precisely why people (rightly or wrongly) suggest investing in an index fund. The issue is that the benchmark for successful investing is beating the general market, not zero. Specifically, if you aren't beating the market or some proxy thereof, you are paying an opportunity cost by investing inefficiently.

Most professional money managers do not beat the market over any reasonable time frame (although they may mitigate certain types of risk relatively effectively), and the folks who sling stocks on RH or TD Ameritrade or whatever also do not beat the market over any reasonable time frame (certainly in aggregrate, and disproportionately true on an individual basis).

> And I have much less reverence towards pros than you.

I actually think this lack of reverence towards the pros is a good thing, but probably not for the reason you think. The pros who exploit less sophisticated counterparties don't advertise this fact very much, if at all -- it is not in their financial best interest to do so.

There is terrible group-think on Wall Street, and there are niche firms that make a killing exploiting this group-think. I consider these niche firms the real "pros".

> While I'm not playing against the pros, I sure am getting better returns than 90% of them.

Your reference time frame is way too short if you actually think this is true. If you think you can scale your returns that beat the market over the long term on a relatively small eight figure fund, you stand to make many millions for yourself, and I recommend you make some friends in the financial world ASAP -- the money will find you. I will bet the don't on your ability to produce market beating results over the long term, since it seems to me that you don't even really understand the basic mechanics of how the market actually works or who the various players actually are.

That said, best of luck.