What is the big deal with RobinHood accounts???

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BeachPerson
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What is the big deal with RobinHood accounts???

Post by BeachPerson »

What is the big deal with RobinHood accounts???

Do Bogleheads have RobinHood accounts?
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Rick Ferri
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Re: What is the big deal with RobinHood accounts???

Post by Rick Ferri »

When casinos closed due to Covid-19, millions of Robinhood accounts opened.

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hagridshut
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Re: What is the big deal with RobinHood accounts???

Post by hagridshut »

The big deal around Robinhood used to be commission-free trading, but this advantage has mostly been nullified now that many other brokerage firms made trading free.

Robinhood's current draw is the user interface in its smartphone app, which I have read is easy to use and behaves a lot like a video game. This makes it both fun and accessible to users.

I personally do not use Robinhood, and I do not recommend it to anyone. I believe that the game-like interface encourages people to trade on emotions and increases the possibility of making multiple bad decisions. Feeding gambling addictions is another possible side effect of this app's existence, although people can just as easy gamble with an eTrade or Interactive Brokers account. Finally, Robinhood had a number of well publicized system failures earlier this year. This caused a number of people on Reddit's r/wallstreetbets to lose substantial amounts of money, as they could not close transactions because the Robinhood system crashed during periods of heavy trading.

I don't believe there is any reason for anyone to have a Robinhood account.

The advantages of Robinhood are miniscule, and the disadvantages are tremendous.
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Re: What is the big deal with RobinHood accounts???

Post by SB1234 »

Then there was this recently, where a Robinhood user tragically misinterpreted the account balance in his account.

https://www.cnn.com/2020/07/14/investin ... index.html
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Re: What is the big deal with RobinHood accounts???

Post by SmallSaver »

Haven't used it, but I think the idea is they've basically gameified all sorts of fairly complex investing and make their money selling the rights to fill the orders to brokerage firms. Good NY Times article here.
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Re: What is the big deal with RobinHood accounts???

Post by whodidntante »

A lot of people will come along to tell you what they heard about Robinhood, but I may be one of the few Bogleheads to use Robinhood. I used it buy 100 shares of F so I could get Ford shareholder pricing on a difficult to negotiate vehicle. I kept the account open a bit longer to see what their margin offering would be, and closed it because the offering was poor.

The app is pretty decent for basic stock trading functions and for looking in on things. Otherwise, the platform is a toy and they also suffer from inexcusable downtime. Support is through e-mail and you'd better not need any. In some ways they are actually a worse broker than Vanguard.
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Re: What is the big deal with RobinHood accounts???

Post by azanon »

I thought one of the draws is also that they support fractional share purchases.
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jason2459
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Re: What is the big deal with RobinHood accounts???

Post by jason2459 »

azanon wrote: Wed Aug 12, 2020 12:14 pm I thought one of the draws is also that they support fractional share purchases.
Others are as well. Schwab stock slices, M1 stock and ETFs slices, and Fidelity in app ETFs by the dollar come to mind.

But Robinhood got the social media influencers and took off with sports gambling down like Rick Ferri said.

I'm not a fan for many shady reasons.
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Re: What is the big deal with RobinHood accounts???

Post by tdmp »

it is a place where people YOLO especially with tech stocks ie. TSLA.
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Re: What is the big deal with RobinHood accounts???

Post by mrspock »

Margin trading aside, they make trading very easy & intuitive in a very clean simple UI. This includes things like options, which are far easier to understand in the Robinhood UI vs. Fidelity and Schwab where all sorts of convoluted terms are used. Robinhood on the other hand will just say "I think XXX is going up" "I think XXX is going down" and they present you dates by which you want to maintain that position, they then clearly show you how much money you'd make if you are right.

Image


They've basically "video game-ified" equity & options trading, which is right up the alley of Millennials who grew up on X-Box & Playstations. Pretty brilliant, and disruptive.

They now account for more trades each day than Fidelity and Schwab *combined*.
Last edited by mrspock on Wed Aug 12, 2020 12:37 pm, edited 1 time in total.
columbia
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Re: What is the big deal with RobinHood accounts???

Post by columbia »

I guess the pony tailed twins on CNBC are selling a lot of options trading books these days....
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Re: What is the big deal with RobinHood accounts???

Post by Valuethinker »

Do you remember the Morgan Stanley ad from the 2000 dot com era? The era of the "day trader" (not a term I have heard in years).

The one with the truck driver and the businessman?

https://www.youtube.com/watch?v=1lnwkXb3B-k

RobinHood is the closet thing I have heard of, since, to day trading.

Its popularity probably has something to do with the fact that, aping Warren Buffett, the FAANGs in particular (or Tesla) don't do stock splits. Companies used to reliably do those if the share price went over say $100, to "improve liquidity". Buffett says it is simply a way of imposing costs (all the custodian costs etc).

Sigh. Every generation has to re-learn the mistakes of the previous ones. Human nature I guess. 1929 taught exactly the same lessons. It's why so many of us 2000 veterans come across as "cynical" or disbelieving.

There's a lot of psychological information that the online gambling and spread betting companies have, about what makes an activity more addictive.
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Re: What is the big deal with RobinHood accounts???

Post by SB1234 »

mrspock wrote: Wed Aug 12, 2020 12:29 pm Margin trading aside, they make trading very easy & intuitive in a very clean simple UI. This includes things like options, which are far easier to understand in the Robinhood UI vs. Fidelity and Schwab where all sorts of convoluted terms are used. Robinhood on the other hand will just say "I think XXX is going up" "I think XXX is going down" and they present you dates by which you want to maintain that position, they then clearly show you how much money you'd make if you are right.

Image


They've basically "video game-ified" equity & options trading, which is right up the alley of Millennials who grew up on X-Box & Playstations. Pretty brilliant, and disruptive.

They now account for more trades each day than Fidelity and Schwab *combined*.
Is there any data where we are in this gamification trend? Are we early in the cycle still or will this continue on to a stage where Robinhood trading is in multiples of trading at other brokerages?
anecdotes are not data
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Re: What is the big deal with RobinHood accounts???

Post by jason2459 »

SB1234 wrote: Wed Aug 12, 2020 12:53 pm
mrspock wrote: Wed Aug 12, 2020 12:29 pm Margin trading aside, they make trading very easy & intuitive in a very clean simple UI. This includes things like options, which are far easier to understand in the Robinhood UI vs. Fidelity and Schwab where all sorts of convoluted terms are used. Robinhood on the other hand will just say "I think XXX is going up" "I think XXX is going down" and they present you dates by which you want to maintain that position, they then clearly show you how much money you'd make if you are right.

Image


They've basically "video game-ified" equity & options trading, which is right up the alley of Millennials who grew up on X-Box & Playstations. Pretty brilliant, and disruptive.

They now account for more trades each day than Fidelity and Schwab *combined*.
Is there any data where we are in this gamification trend? Are we early in the cycle still or will this continue on to a stage where Robinhood trading is in multiples of trading at other brokerages?
Not sure it's a trend. Maybe a fad. It certainly tailors to the gambling community where it's all a game to them.

I think the trends are to make ETF trading more accessible by allowing dollar based trading like mutual funds. This really helps tailor more to a buy and hold investor then a day trader. Allowing someone every paycheck sink a set amount in and leave it alone.

M1 went the totally opposite approach then Robinhood. You can't trade through out the day and only in set windows. Interface is very simple and easy to use but It's all about fully automatic dollar based asset allocation (pies) based investing .
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Re: What is the big deal with RobinHood accounts???

Post by jarjarM »

Robintrack used to track all the trades on Robinhood via their API. But it was just shut down. :x
azanon
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Re: What is the big deal with RobinHood accounts???

Post by azanon »

jason2459 wrote: Wed Aug 12, 2020 12:20 pm
azanon wrote: Wed Aug 12, 2020 12:14 pm I thought one of the draws is also that they support fractional share purchases.
Others are as well. Schwab stock slices, M1 stock and ETFs slices, and Fidelity in app ETFs by the dollar come to mind.

But Robinhood got the social media influencers and took off with sports gambling down like Rick Ferri said.

I'm not a fan for many shady reasons.
"They" should have switched to horse racing like i did. Horse racing is big(er) now, 2 HD channels and plenty of apps for easy .... participation.
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Re: What is the big deal with RobinHood accounts???

Post by mrspock »

I'd actually be a bit cautious mocking Robinhood "traders". Once you peel away the absurd terminology and silly UIs of legacy trading platforms, very interesting things may emerge. Remember, this is a generation which puts in hours on end getting good at their favorite video game, and to them, this is another video game to master -- and many will. It's also important to note that equity investing/trading is *not* gambling, it's synthesizing information and making decisions based on that information which result in an outcome. If you make good decisions, you profit, if you don't you lose capital. Most forms of gambling on the other hand has an expected loss no matter what decisions you make. I'd liken it to Poker, where there's a mixture of skill and luck.

There's a good chance you get some very talented folks who come from the Robinhood ranks, who make some Hedge Fund managers look like dinosaurs in the investing game. This is pretty typical any time technology has "democratized" a given domain. People who would never have risen to fame and fortune, are now massive influencers making huge money, something which would have been only possible via Hollywood.

I consider Robinhood a net good thing. In fact I hope it goes further and allows things like algorithmic trading to be brought to the masses for very little cost (hopefully free).
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Re: What is the big deal with RobinHood accounts???

Post by Jeff Albertson »

Valuethinker wrote: Wed Aug 12, 2020 12:35 pm RobinHood is the closet thing I have heard of, since, to day trading.

Its popularity probably has something to do with the fact that, aping Warren Buffett, the FAANGs in particular (or Tesla) don't do stock splits. Companies used to reliably do those if the share price went over say $100, to "improve liquidity". Buffett says it is simply a way of imposing costs (all the custodian costs etc).
FWIW, Tesla & Apple have recently announced splits -
"Tesla will split its stock for the first time in the electric-vehicle maker's history to make its shares more affordable, giving more investors the chance to buy a stake in the company after a meteoric rise in its market value.

The five-for-one stock split announced Tuesday won't change how much Tesla's business is worth, but will automatically reduce the price of Tesla shares by 80% when it's completed on Aug. 31.

The move follows a similar announcement by Apple in late July that it would split its stock four-to-one later this month — the fifth such action by the iPhone maker, and first since 2014."
https://www.cbsnews.com/news/tesla-adds ... r-1-split/
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Re: What is the big deal with RobinHood accounts???

Post by gator15 »

I have both a Robinhood and Acorns account. I enjoy them both. I’m not sure if they have any advantages over other brokerages. I like Robinhood more for quick accessibility. I like Acorns and the round up idea. I’ve funded small trips with money saved through acorns. Owning both accounts probably doesn’t make sense to most but it works for me.
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Re: What is the big deal with RobinHood accounts???

Post by Scooter57 »

I checked Robinhood out when they were new, after learning about it on this forum, but learned that they would charge me a fee to move my holdings out of their brokerage. so I never moved any money on. I don't know if this is still true.

The simplified options interface does not seem like a good idea to me because it doesn't explain what happens with naked options, which is where people end up loosing more than they risked. Often much more.

Also, because it appeals to momentum day traders it eclipses price discovery based on fundamentals and replaces them with pure emotion. This has made all you index fund holders happy as the the momentum has been all up,, but when it turns down, watch out below. Option traders don't care if they are betting on up or down. Value investing will become a quaint relic of the days when people communicated in paragraphs, not hastags.

The bad news is that sports this fall are looking pretty feeble so the sports bettors may stick around and dominate trading for a long time. (Or at least until a majority lose their shirts, pants, and undies.)
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Re: What is the big deal with RobinHood accounts???

Post by nydoc »

I opened my Robinhood account when it was the only one offering free trades. I use it for my fun money.
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Re: What is the big deal with RobinHood accounts???

Post by 123 »

I don't have any use for RobinHood but I suspect that investor "newbies" like it because it can make them feel like a wheeler dealer trading a bunch of stocks (even if is is primarily fractional shares). I think any sense of charm it provides would wear off quickly once the user realizes the tax reporting consequences of a lot of activity. Sure the tax reporting can be largely automated but the more activity you have the greater the liklihood of things like wash sales and other complications and errors.
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Re: What is the big deal with RobinHood accounts???

Post by 000 »

They are less discriminatory in allowing investors access to options.
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Re: What is the big deal with RobinHood accounts???

Post by Walkure »

123 wrote: Wed Aug 12, 2020 6:58 pm I don't have any use for RobinHood but I suspect that investor "newbies" like it because it can make them feel like a wheeler dealer trading a bunch of stocks (even if is is primarily fractional shares). I think any sense of charm it provides would wear off quickly once the user realizes the tax reporting consequences of a lot of activity. Sure the tax reporting can be largely automated but the more activity you have the greater the liklihood of things like wash sales and other complications and errors.
But it shouldn't be any more difficult than the tax reporting on gambling proceeds, and even in the worst STCG wash sale case, you're still at regular income rates. Now if anyone wants to take a stab at a counterpart "KingJohnLackland" app that gamifies tax preparation, that could really make things interesting...
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Re: What is the big deal with RobinHood accounts???

Post by firebirdparts »

Robin Hood was founded in 2012 and simply was a brokerage that fits on your phone. Their business is based on making investing more "approachable" for younger investors and it's working. Investors have been committing suicide for a long time, and the secret password to be admitted to that group, as we all know, is leverage. Leverage is available at brokers if you fill out a form that says basically "I am a rich genius".

Had it not been for the "infinite leverage" flap, we might think of Robin Hood very differently. I'm not sure why it took so long for that to occur, but I guess there's a reason. For me, at least, that was when it became apparent that they weren't paying very careful attention. There was no connection between "infinite leverage" and the recent death. Robin hood amusingly was locked up on March 2, and the big joke was they forgot it was leap year, but there was less fallout from that.

So anyway, everybody makes jokes about RH users but inexperienced people are their target market.
Last edited by firebirdparts on Thu Aug 13, 2020 3:19 pm, edited 1 time in total.
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Re: What is the big deal with RobinHood accounts???

Post by jason2459 »

They also have a hard time understanding simple things like what's the difference between SPIC and FDIC.
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Re: What is the big deal with RobinHood accounts???

Post by arcticpineapplecorp. »

mrspock wrote: Wed Aug 12, 2020 2:10 pm I'd actually be a bit cautious mocking Robinhood "traders". Once you peel away the absurd terminology and silly UIs of legacy trading platforms, very interesting things may emerge. Remember, this is a generation which puts in hours on end getting good at their favorite video game, and to them, this is another video game to master -- and many will. It's also important to note that equity investing/trading is *not* gambling, it's synthesizing information and making decisions based on that information which result in an outcome. If you make good decisions, you profit, if you don't you lose capital. Most forms of gambling on the other hand has an expected loss no matter what decisions you make. I'd liken it to Poker, where there's a mixture of skill and luck.

There's a good chance you get some very talented folks who come from the Robinhood ranks, who make some Hedge Fund managers look like dinosaurs in the investing game. This is pretty typical any time technology has "democratized" a given domain. People who would never have risen to fame and fortune, are now massive influencers making huge money, something which would have been only possible via Hollywood.

I consider Robinhood a net good thing. In fact I hope it goes further and allows things like algorithmic trading to be brought to the masses for very little cost (hopefully free).
but you don't need skill or luck when you invest. If you own the market, you get the return of the market.

you don't get the return of the market...if you're lucky.
you don't get the return of the market...because you're skillful.

trading and individual stock speculation is a zero sum game which is not true of the market, of which the return is available to everyone.

when you trade/speculate with individual stocks you are on one side of the trade and someone is on the other side.

If you're buying, you think the stock price will go up, otherwise you wouldn't buy it now, you'd either:
1. buy it later when it's price is lower
2. not buy it at all

for the other person on the other side of the trade, s/he's selling to you believing the stock price will go down, otherwise s/he wouldn't sell it now, s/he'd either:
1. sell it later when it's price is higher (and not leave money on the table)
2. not sell it at all

so you think the price will go higher (that's why you're buying) but the seller thinks the price will go lower.

only one of you will be right.

there's no way to know that in advance.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
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Re: What is the big deal with RobinHood accounts???

Post by arcticpineapplecorp. »

mrspock wrote: Wed Aug 12, 2020 12:29 pm Margin trading aside, they make trading very easy & intuitive in a very clean simple UI. This includes things like options, which are far easier to understand in the Robinhood UI vs. Fidelity and Schwab where all sorts of convoluted terms are used. Robinhood on the other hand will just say "I think XXX is going up" "I think XXX is going down" and they present you dates by which you want to maintain that position, they then clearly show you how much money you'd make if you are right.

Image


They've basically "video game-ified" equity & options trading, which is right up the alley of Millennials who grew up on X-Box & Playstations. Pretty brilliant, and disruptive.

They now account for more trades each day than Fidelity and Schwab *combined*.
"I think it's going up"

See anything wrong with that wording?

Shouldn't it be, "I think it will go up"?

How would you actually know if it will go up?

Guessing, gambling, pure and simple.

not investing.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
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Re: What is the big deal with RobinHood accounts???

Post by 000 »

I'll just note that every investment available at Robinhood is also available at Vanguard, Fidelity, ...
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Re: What is the big deal with RobinHood accounts???

Post by ballons »

mrspock wrote: Wed Aug 12, 2020 2:10 pm I'd actually be a bit cautious mocking Robinhood "traders". Once you peel away the absurd terminology and silly UIs of legacy trading platforms, very interesting things may emerge. Remember, this is a generation which puts in hours on end getting good at their favorite video game, and to them, this is another video game to master -- and many will. It's also important to note that equity investing/trading is *not* gambling, it's synthesizing information and making decisions based on that information which result in an outcome. If you make good decisions, you profit, if you don't you lose capital. Most forms of gambling on the other hand has an expected loss no matter what decisions you make. I'd liken it to Poker, where there's a mixture of skill and luck.

There's a good chance you get some very talented folks who come from the Robinhood ranks, who make some Hedge Fund managers look like dinosaurs in the investing game. This is pretty typical any time technology has "democratized" a given domain. People who would never have risen to fame and fortune, are now massive influencers making huge money, something which would have been only possible via Hollywood.

I consider Robinhood a net good thing. In fact I hope it goes further and allows things like algorithmic trading to be brought to the masses for very little cost (hopefully free).
Just like how after mastering Madden, players go on to be highly successful NFL/NCAA coaches.

Robinhood is day trading. The vast majority if not all are gambling. "take risky action in the hope of a desired result."
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Re: What is the big deal with RobinHood accounts???

Post by 000 »

ballons wrote: Thu Aug 13, 2020 3:51 pm
mrspock wrote: Wed Aug 12, 2020 2:10 pm I'd actually be a bit cautious mocking Robinhood "traders". Once you peel away the absurd terminology and silly UIs of legacy trading platforms, very interesting things may emerge. Remember, this is a generation which puts in hours on end getting good at their favorite video game, and to them, this is another video game to master -- and many will. It's also important to note that equity investing/trading is *not* gambling, it's synthesizing information and making decisions based on that information which result in an outcome. If you make good decisions, you profit, if you don't you lose capital. Most forms of gambling on the other hand has an expected loss no matter what decisions you make. I'd liken it to Poker, where there's a mixture of skill and luck.

There's a good chance you get some very talented folks who come from the Robinhood ranks, who make some Hedge Fund managers look like dinosaurs in the investing game. This is pretty typical any time technology has "democratized" a given domain. People who would never have risen to fame and fortune, are now massive influencers making huge money, something which would have been only possible via Hollywood.

I consider Robinhood a net good thing. In fact I hope it goes further and allows things like algorithmic trading to be brought to the masses for very little cost (hopefully free).
Just like how after mastering Madden, players go on to be highly successful NFL/NCAA coaches.

Robinhood is day trading. The vast majority if not all are gambling. "take risky action in the hope of a desired result."
Any evidence for this claim?
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Re: What is the big deal with RobinHood accounts???

Post by ballons »

000 wrote: Thu Aug 13, 2020 4:02 pm
ballons wrote: Thu Aug 13, 2020 3:51 pm
mrspock wrote: Wed Aug 12, 2020 2:10 pm I'd actually be a bit cautious mocking Robinhood "traders". Once you peel away the absurd terminology and silly UIs of legacy trading platforms, very interesting things may emerge. Remember, this is a generation which puts in hours on end getting good at their favorite video game, and to them, this is another video game to master -- and many will. It's also important to note that equity investing/trading is *not* gambling, it's synthesizing information and making decisions based on that information which result in an outcome. If you make good decisions, you profit, if you don't you lose capital. Most forms of gambling on the other hand has an expected loss no matter what decisions you make. I'd liken it to Poker, where there's a mixture of skill and luck.

There's a good chance you get some very talented folks who come from the Robinhood ranks, who make some Hedge Fund managers look like dinosaurs in the investing game. This is pretty typical any time technology has "democratized" a given domain. People who would never have risen to fame and fortune, are now massive influencers making huge money, something which would have been only possible via Hollywood.

I consider Robinhood a net good thing. In fact I hope it goes further and allows things like algorithmic trading to be brought to the masses for very little cost (hopefully free).
Just like how after mastering Madden, players go on to be highly successful NFL/NCAA coaches.

Robinhood is day trading. The vast majority if not all are gambling. "take risky action in the hope of a desired result."
Any evidence for this claim?
Robinhood traders were "synthesizing information and making decisions" by buying bankrupt Hertz stock. The SEC had to prevent the world's first Initial Bankruptcy Offer.

https://www.cnbc.com/2020/06/17/the-sec ... -says.html
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Re: What is the big deal with RobinHood accounts???

Post by 000 »

ballons wrote: Thu Aug 13, 2020 4:15 pm
000 wrote: Thu Aug 13, 2020 4:02 pm
ballons wrote: Thu Aug 13, 2020 3:51 pm
mrspock wrote: Wed Aug 12, 2020 2:10 pm I'd actually be a bit cautious mocking Robinhood "traders". Once you peel away the absurd terminology and silly UIs of legacy trading platforms, very interesting things may emerge. Remember, this is a generation which puts in hours on end getting good at their favorite video game, and to them, this is another video game to master -- and many will. It's also important to note that equity investing/trading is *not* gambling, it's synthesizing information and making decisions based on that information which result in an outcome. If you make good decisions, you profit, if you don't you lose capital. Most forms of gambling on the other hand has an expected loss no matter what decisions you make. I'd liken it to Poker, where there's a mixture of skill and luck.

There's a good chance you get some very talented folks who come from the Robinhood ranks, who make some Hedge Fund managers look like dinosaurs in the investing game. This is pretty typical any time technology has "democratized" a given domain. People who would never have risen to fame and fortune, are now massive influencers making huge money, something which would have been only possible via Hollywood.

I consider Robinhood a net good thing. In fact I hope it goes further and allows things like algorithmic trading to be brought to the masses for very little cost (hopefully free).
Just like how after mastering Madden, players go on to be highly successful NFL/NCAA coaches.

Robinhood is day trading. The vast majority if not all are gambling. "take risky action in the hope of a desired result."
Any evidence for this claim?
Robinhood traders were "synthesizing information and making decisions" by buying bankrupt Hertz stock. The SEC had to prevent the world's first Initial Bankruptcy Offer.

https://www.cnbc.com/2020/06/17/the-sec ... -says.html
Is one a gambler if one bought HTZ after the bankruptcy announcement in one's Vanguard brokerage account?

Would that make other Vanguard users gamblers?
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Re: What is the big deal with RobinHood accounts???

Post by guyinlaw »

Rick Ferri wrote: Wed Aug 12, 2020 11:17 am When casinos closed due to Covid-19, millions of Robinhood accounts opened.

Rick Ferri
- Closed casinos
- increased money in people account - covid checks, bars etc closed where one can spend
- fractional shares
- Robinhood interface is slick - "tinder and casino like"

https://www.wsj.com/articles/amazon-and ... 1596715201
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ballons
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Re: What is the big deal with RobinHood accounts???

Post by ballons »

000 wrote: Thu Aug 13, 2020 4:17 pm
ballons wrote: Thu Aug 13, 2020 4:15 pm
000 wrote: Thu Aug 13, 2020 4:02 pm
ballons wrote: Thu Aug 13, 2020 3:51 pm
mrspock wrote: Wed Aug 12, 2020 2:10 pm I'd actually be a bit cautious mocking Robinhood "traders". Once you peel away the absurd terminology and silly UIs of legacy trading platforms, very interesting things may emerge. Remember, this is a generation which puts in hours on end getting good at their favorite video game, and to them, this is another video game to master -- and many will. It's also important to note that equity investing/trading is *not* gambling, it's synthesizing information and making decisions based on that information which result in an outcome. If you make good decisions, you profit, if you don't you lose capital. Most forms of gambling on the other hand has an expected loss no matter what decisions you make. I'd liken it to Poker, where there's a mixture of skill and luck.

There's a good chance you get some very talented folks who come from the Robinhood ranks, who make some Hedge Fund managers look like dinosaurs in the investing game. This is pretty typical any time technology has "democratized" a given domain. People who would never have risen to fame and fortune, are now massive influencers making huge money, something which would have been only possible via Hollywood.

I consider Robinhood a net good thing. In fact I hope it goes further and allows things like algorithmic trading to be brought to the masses for very little cost (hopefully free).
Just like how after mastering Madden, players go on to be highly successful NFL/NCAA coaches.

Robinhood is day trading. The vast majority if not all are gambling. "take risky action in the hope of a desired result."
Any evidence for this claim?
Robinhood traders were "synthesizing information and making decisions" by buying bankrupt Hertz stock. The SEC had to prevent the world's first Initial Bankruptcy Offer.

https://www.cnbc.com/2020/06/17/the-sec ... -says.html
Is one a gambler if one bought HTZ after the bankruptcy announcement in one's Vanguard brokerage account?

Would that make other Vanguard users gamblers?
Yes. Did other vanguard users do this?

Image

https://www.reddit.com/r/wallstreetbets/
https://www.reddit.com/r/RobinHood/
Impatience
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Re: What is the big deal with RobinHood accounts???

Post by Impatience »

Robinhood gets a lot of publicity from the gamblers but just because they are a noisy bunch doesn’t mean you can’t easily use it to buy and hold long term as you could in any brokerage. Many do. You just don’t see the guy/gal holding 100 shares of VOO posting about it on reddit so you think they must not exist.
ChrisBenn
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Re: What is the big deal with RobinHood accounts???

Post by ChrisBenn »

RobinHood deserves credit for pushing the removal of broker trade fees (imo). Without their continued growth in the retail market as an example/generational threat I wonder if Schwab would have really started the dominoes toppling.

I have a small RH account I use to play around with; I actually like that the experience (UI/UX) is completely different than my investment broker.
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jason2459
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Re: What is the big deal with RobinHood accounts???

Post by jason2459 »

ChrisBenn wrote: Thu Aug 13, 2020 6:11 pm RobinHood deserves credit for pushing the removal of broker trade fees (imo). Without their continued growth in the retail market as an example/generational threat I wonder if Schwab would have really started the dominoes toppling.

I have a small RH account I use to play around with; I actually like that the experience (UI/UX) is completely different than my investment broker.
It was coming.

Pre Robinhood and Acorns there was Sharebuilder. Came out early 2000's. There were multiple types of plans. I was on one that was like $24 for the year and could do like 12 trades a month. I was on another plan and it was like $12 a month and could do unlimited trades. They also supported fractional ETF trades at that on all their plans. And could automate investments.

Unfortunately they got bought out and bought out again and bought out again with a final resting place with E*Trade where I'm at now. I was grandfathered in with my original plans until E*Trade killed it all and didn't even leverage their ability to buy/sell fractional shares.
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jason2459
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Re: What is the big deal with RobinHood accounts???

Post by jason2459 »

Also, commission fees were gradually dropping before Robinhood. I don't know what fees were like pre 90s but I had/have a Scottrade account (now TD Ameritrade/ now Schwab) and if I remember right trades started around $14. Dropped to around $7 by late 90s I think, and then dropped to around $5 and now where we are now at $0 for most stocks and funds. Some funds still have transaction fees. Not just load fees. My timelines I'm sure are off but trading has progressively gotten cheaper over the decades regardless of Robinhood.
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jason2459
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Re: What is the big deal with RobinHood accounts???

Post by jason2459 »

Found this old computer world clipping from 2000 when some banks like Wells Fargo signed up to provide services to customers using Sharebuilder. Fractional share cheap transactions.

https://books.google.com/books?id=P0aIL ... es&f=false
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mrspock
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Re: What is the big deal with RobinHood accounts???

Post by mrspock »

ballons wrote: Thu Aug 13, 2020 4:15 pm
000 wrote: Thu Aug 13, 2020 4:02 pm
ballons wrote: Thu Aug 13, 2020 3:51 pm
mrspock wrote: Wed Aug 12, 2020 2:10 pm I'd actually be a bit cautious mocking Robinhood "traders". Once you peel away the absurd terminology and silly UIs of legacy trading platforms, very interesting things may emerge. Remember, this is a generation which puts in hours on end getting good at their favorite video game, and to them, this is another video game to master -- and many will. It's also important to note that equity investing/trading is *not* gambling, it's synthesizing information and making decisions based on that information which result in an outcome. If you make good decisions, you profit, if you don't you lose capital. Most forms of gambling on the other hand has an expected loss no matter what decisions you make. I'd liken it to Poker, where there's a mixture of skill and luck.

There's a good chance you get some very talented folks who come from the Robinhood ranks, who make some Hedge Fund managers look like dinosaurs in the investing game. This is pretty typical any time technology has "democratized" a given domain. People who would never have risen to fame and fortune, are now massive influencers making huge money, something which would have been only possible via Hollywood.

I consider Robinhood a net good thing. In fact I hope it goes further and allows things like algorithmic trading to be brought to the masses for very little cost (hopefully free).
Just like how after mastering Madden, players go on to be highly successful NFL/NCAA coaches.

Robinhood is day trading. The vast majority if not all are gambling. "take risky action in the hope of a desired result."
Any evidence for this claim?
Robinhood traders were "synthesizing information and making decisions" by buying bankrupt Hertz stock. The SEC had to prevent the world's first Initial Bankruptcy Offer.

https://www.cnbc.com/2020/06/17/the-sec ... -says.html
I'm not making a value judgement here on if their conclusions are correct, or their interpretations of the information they are basing their trades on are correct. Nor am I saying the majority of them are going to out perform an index fund. On both counts, it's entirely possible they are making bad/poor interpretations and grossly under performing. However, this doesn't make what they are doing gambling, and to say as such is just being unfair, and insulting to those who are trying to better their financial futures through investing.

I think my fundamental gripe with the often used trope of "Robinhood users are gambling", is that Gambling has a negative expected return. Investing as a whole, does not. Just because you might be terrible at it, doesn't make you a gambler or a bad person .... it makes you a poor or inexperienced investor. In contrast, when you truly "gamble" it doesn't matter how good or experienced you happen to be.... the house will still win (with the possible exceptions of Poker & card counting Blackjack).

The flippant attitude many have towards Robinhood investors, just really comes across as condescending. Instead of mocking, maybe we should either teach (last I checked you could buy VT, VOO or VTI on Robinhood), or let them do their thing...and we do ours.
Last edited by mrspock on Thu Aug 13, 2020 7:46 pm, edited 1 time in total.
rockstar
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Re: What is the big deal with RobinHood accounts???

Post by rockstar »

My employees use their service. They were attracted to the zero commissions. Of course, when the market crashed and their service went down, they started looking at transferring their holdings to a bigger broker such as Schwab.
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jason2459
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Re: What is the big deal with RobinHood accounts???

Post by jason2459 »

mrspock wrote: Thu Aug 13, 2020 7:25 pm ... Investing as a whole, does not. Just because you might be terrible at it, doesn't make you a gambler or a bad person .... it makes you a poor or inexperienced investor.

...
I agree generalization are over done in the media and on here. Not every Robinhood account is a gambler or was one. Some are buy and hold investors.

I did snip that particular section out as I do want to emphasize that those that are trying their hand at day trading is a form of gambling to them. And that trading securities is not investing.
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Re: What is the big deal with RobinHood accounts???

Post by Grt2bOutdoors »

columbia wrote: Wed Aug 12, 2020 12:34 pm I guess the pony tailed twins on CNBC are selling a lot of options trading books these days....
:greedy :greedy :greedy
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Grt2bOutdoors
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Re: What is the big deal with RobinHood accounts???

Post by Grt2bOutdoors »

jason2459 wrote: Thu Aug 13, 2020 6:36 pm Also, commission fees were gradually dropping before Robinhood. I don't know what fees were like pre 90s but I had/have a Scottrade account (now TD Ameritrade/ now Schwab) and if I remember right trades started around $14. Dropped to around $7 by late 90s I think, and then dropped to around $5 and now where we are now at $0 for most stocks and funds. Some funds still have transaction fees. Not just load fees. My timelines I'm sure are off but trading has progressively gotten cheaper over the decades regardless of Robinhood.
I had a Schwab account in the late ‘80’s, I placed the trade using a touch tone telephone at the flat fee commission was $39.00. If you needed a live broker, the fee was $49.00. We’ve come a long way.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Kookaburra
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Re: What is the big deal with RobinHood accounts???

Post by Kookaburra »

The interface doesn’t look like a video game interface to me, unless we’re talking 1970’s pong graphics.
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Rob5TCP
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Re: What is the big deal with RobinHood accounts???

Post by Rob5TCP »

000 wrote: Thu Aug 13, 2020 4:02 pm
ballons wrote: Thu Aug 13, 2020 3:51 pm
mrspock wrote: Wed Aug 12, 2020 2:10 pm I'd actually be a bit cautious mocking Robinhood "traders". Once you peel away the absurd terminology and silly UIs of legacy trading platforms, very interesting things may emerge. Remember, this is a generation which puts in hours on end getting good at their favorite video game, and to them, this is another video game to master -- and many will. It's also important to note that equity investing/trading is *not* gambling, it's synthesizing information and making decisions based on that information which result in an outcome. If you make good decisions, you profit, if you don't you lose capital. Most forms of gambling on the other hand has an expected loss no matter what decisions you make. I'd liken it to Poker, where there's a mixture of skill and luck.

There's a good chance you get some very talented folks who come from the Robinhood ranks, who make some Hedge Fund managers look like dinosaurs in the investing game. This is pretty typical any time technology has "democratized" a given domain. People who would never have risen to fame and fortune, are now massive influencers making huge money, something which would have been only possible via Hollywood.

I consider Robinhood a net good thing. In fact I hope it goes further and allows things like algorithmic trading to be brought to the masses for very little cost (hopefully free).
Just like how after mastering Madden, players go on to be highly successful NFL/NCAA coaches.

Robinhood is day trading. The vast majority if not all are gambling. "take risky action in the hope of a desired result."
Any evidence for this claim?
If they follow the route of previous day traders - most will be on the end of losing trades. A very small percentage will do fabulously (and probably have a great following).

https://www.bloomberg.com/opinion/artic ... -wiped-out
000
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Re: What is the big deal with RobinHood accounts???

Post by 000 »

Rob5TCP wrote: Thu Aug 13, 2020 8:07 pm
000 wrote: Thu Aug 13, 2020 4:02 pm
ballons wrote: Thu Aug 13, 2020 3:51 pm
mrspock wrote: Wed Aug 12, 2020 2:10 pm I'd actually be a bit cautious mocking Robinhood "traders". Once you peel away the absurd terminology and silly UIs of legacy trading platforms, very interesting things may emerge. Remember, this is a generation which puts in hours on end getting good at their favorite video game, and to them, this is another video game to master -- and many will. It's also important to note that equity investing/trading is *not* gambling, it's synthesizing information and making decisions based on that information which result in an outcome. If you make good decisions, you profit, if you don't you lose capital. Most forms of gambling on the other hand has an expected loss no matter what decisions you make. I'd liken it to Poker, where there's a mixture of skill and luck.

There's a good chance you get some very talented folks who come from the Robinhood ranks, who make some Hedge Fund managers look like dinosaurs in the investing game. This is pretty typical any time technology has "democratized" a given domain. People who would never have risen to fame and fortune, are now massive influencers making huge money, something which would have been only possible via Hollywood.

I consider Robinhood a net good thing. In fact I hope it goes further and allows things like algorithmic trading to be brought to the masses for very little cost (hopefully free).
Just like how after mastering Madden, players go on to be highly successful NFL/NCAA coaches.

Robinhood is day trading. The vast majority if not all are gambling. "take risky action in the hope of a desired result."
Any evidence for this claim?
If they follow the route of previous day traders - most will be on the end of losing trades. A very small percentage will do fabulously (and probably have a great following).

https://www.bloomberg.com/opinion/artic ... -wiped-out
I was asking about the claim that "The vast majority if not all are gambling". So far, no evidence to that effect has been presented.
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jason2459
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Re: What is the big deal with RobinHood accounts???

Post by jason2459 »

Grt2bOutdoors wrote: Thu Aug 13, 2020 8:03 pm
jason2459 wrote: Thu Aug 13, 2020 6:36 pm Also, commission fees were gradually dropping before Robinhood. I don't know what fees were like pre 90s but I had/have a Scottrade account (now TD Ameritrade/ now Schwab) and if I remember right trades started around $14. Dropped to around $7 by late 90s I think, and then dropped to around $5 and now where we are now at $0 for most stocks and funds. Some funds still have transaction fees. Not just load fees. My timelines I'm sure are off but trading has progressively gotten cheaper over the decades regardless of Robinhood.
I had a Schwab account in the late ‘80’s, I placed the trade using a touch tone telephone at the flat fee commission was $39.00. If you needed a live broker, the fee was $49.00. We’ve come a long way.
Haha! Yeah, that's how I started with Scottrade. They were the cheapest discount broker at the time. I recall getting paper stock certificates or receipts in the mail.
paisano
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Re: What is the big deal with RobinHood accounts???

Post by paisano »

Before May 1975, rates were set by the S.E.C. https://www0.gsb.columbia.edu/mygsb/fac ... 0Costs.pdf has a history of rate schedules. https://www.nytimes.com/1973/09/12/arch ... lears.html describes two examples for a $50 stock: $65 for 100 shares and $402 for 1000 shares.

Per https://money.cnn.com/magazines/fortune ... /index.htm, the average Schwab commission in 1997 was still $63. Per https://money.cnn.com/2000/03/16/invest ... rokerguide, Schwab dropped to $30 by 2000, with E*Trade at $20 and TD Waterhouse at $12.
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