3 ms·

Vest's value proposition is very weak in my opinion. The service is meant to solve the problem demonstrated by a recent Goldman Sachs survey: only 18% of mille

Vest's value proposition is very weak in my opinion. The service is meant to solve the problem demonstrated by a recent Goldman Sachs survey: only 18% of millenials think that the stock market is the "best way to save for the future". If someone can figure out how to get more millenials investing, they could make money off commission, brokerage fees and the like. First problem: Options are usually built for savvy investors who operate on short-mid term time horizons and with volatile/uncertain underlying assets. Not millenials who want to earn market returns through an ETF or hand-picked portfolio of blue chips + hot tech stocks. Options are not a solution for long-term investment strategies - diversified portfolios, index funds, and ETFs are. Second problem: If I really cared enough to add some downside protection to going long on Google, Coke, Visa, etc. I would literally just google "how to place a stop loss order etrade" and find this article [1] that describes how to set up an automatic limit: enter stopping price, specify whether it's a stop on quote or stop on limit order, specify whether to buy or to sell, specify how many shares, execute. So why would I pay a non-negligible percentage of my upside on top of the option premium for something that I could do myself in literally 2 minutes? The reason we don't trust the stock market is because the financial sector has a reputation for greed, corruption, and manipulation which will inevitably lead to another economic calamity coupled with a stock market crash. Making options marginally more accessible to casual investors is not coming close to solving this problem. [1] https://us.etrade.com/e/t/prospectestation/help?id=1301020000#Stop https://us.etrade.com/e/t/prospectestation/help?id=130102000...

muhammedbash 11y ago
A stop loss is one way of having downside protection but you would use a put option for temporary downside protection i.e. the market can move against you in the short term and rebound. If you had a stop loss, you can prematurely close your position; with the put you have some insurance for the short term which allows you hold on to your position for a rebound.
ryandrake 11y ago
I'm not sure how providing yet another way to trade options is a good way to get millennials to invest, if they don't think the stock market is the best way to save. Quite honestly if I was a millennial (I'm close), I would not even be thinking about saving, let alone gambling on the stock market, given today's economy. My financial worries would be about exorbitant, growing rent payments, the huge burden of student debt, a dim and worsening job market, automation (which hits low-skill and low-experience workers hardest) and the disappearing opportunity to own a home and start a stable family. Telling millennials to gamble their nonexistent disposable income on Wall Street financial products is kind of tone deaf, given the economic outlook for this generation.
- cryoshon 11y ago
  Yes, your reaction is similar to mine. I am a millenial. Maybe once there is stability again there will be investment from millenials. Otherwise, it's another laughable instance of Wall Street not understanding Main Street, as trite as it sounds.
- roymurdock 11y ago
  Agreed. Here's my analysis of the situation, posted as a response to an article on slow income growth: https://news.ycombinator.com/item?id=10001540 https://news.ycombinator.com/item?id=10001540
cryoshon 11y ago
Millenials also have a lot of priorities that come before investing for their future. Student loans are choking the generation's ability to have spare cash for savings and investing. In fact, I'd say the only group of millenials that are thinking of "investing" at all are the rich ones. The young middle class doesn't have enough money burn to participate in the stock market anymore. Then there's the other problem: the millenials are living through the worst economic depression since the Great Depression. They saw the economy collapse and take out their parents 401ks which they had build for decades overnight. It's no mystery why they aren't interested in playing the sucker's game with the precious little money they have. Then there's the third problem: we're due for another crash. It's been 7 years or so since the last one, and that duration of time is very typical from the market's peak to peak and trough to trough. Nothing has been fixed. Smart people have smelled this coming for over a year. It's a horrendously bad time to invest.
- makeset 11y ago
  No, it's a wonderfully great time to invest, because given the strong national economy the market is due to keep climbing and recoup the setback from the latest crash, so staying on the sidelines is losing out. Notice how that's no less informed about the future than your wild speculation?
  - shostack 11y ago
    Thanks for this. I keep seeing all these doomsday posts of people feeling like there is an axe hanging over their heads waiting for it to drop. The same is true about the real estate market. The reality is that outside of a few people, the last crash was largely unanticipated. Just as with that crash, the next one is likely to be another black swan event we cannot predict. Black swan events don't stick to a schedule and you can't time the market.
    - roymurdock 11y ago
      Market sentiment is a powerful force. Never underestimate a critical mass of pessimism/optimism, no matter how irrational.
3pt14159 11y ago
I generally agree - it's mostly a UI as a service (although, there might be some economics of scale there since not everyone can buy 100 Apple stocks at a time), but there is one aspect that I think is unexploited: the pre-sell. Essentially I know a lot of retail investors that if you told them "Would you sell this stock if it went up by 20% in the next 6 months?" they would answer "yes" and they might even put in a market limit order ahead of time, but they don't ever sell covered calls. A nice interface for this could really help retail investors.

muhammedbash 11y ago

A stop loss is one way of having downside protection but you would use a put option for temporary downside protection i.e. the market can move against you in the short term and rebound. If you had a stop loss, you can prematurely close your position; with the put you have some insurance for the short term which allows you hold on to your position for a rebound.

ryandrake 11y ago

I'm not sure how providing yet another way to trade options is a good way to get millennials to invest, if they don't think the stock market is the best way to save. Quite honestly if I was a millennial (I'm close), I would not even be thinking about saving, let alone gambling on the stock market, given today's economy. My financial worries would be about exorbitant, growing rent payments, the huge burden of student debt, a dim and worsening job market, automation (which hits low-skill and low-experience workers hardest) and the disappearing opportunity to own a home and start a stable family. Telling millennials to gamble their nonexistent disposable income on Wall Street financial products is kind of tone deaf, given the economic outlook for this generation.

cryoshon 11y ago
Yes, your reaction is similar to mine. I am a millenial. Maybe once there is stability again there will be investment from millenials. Otherwise, it's another laughable instance of Wall Street not understanding Main Street, as trite as it sounds.
roymurdock 11y ago
Agreed. Here's my analysis of the situation, posted as a response to an article on slow income growth: https://news.ycombinator.com/item?id=10001540 https://news.ycombinator.com/item?id=10001540

cryoshon 11y ago

Millenials also have a lot of priorities that come before investing for their future. Student loans are choking the generation's ability to have spare cash for savings and investing. In fact, I'd say the only group of millenials that are thinking of "investing" at all are the rich ones. The young middle class doesn't have enough money burn to participate in the stock market anymore. Then there's the other problem: the millenials are living through the worst economic depression since the Great Depression. They saw the economy collapse and take out their parents 401ks which they had build for decades overnight. It's no mystery why they aren't interested in playing the sucker's game with the precious little money they have. Then there's the third problem: we're due for another crash. It's been 7 years or so since the last one, and that duration of time is very typical from the market's peak to peak and trough to trough. Nothing has been fixed. Smart people have smelled this coming for over a year. It's a horrendously bad time to invest.

makeset 11y ago
No, it's a wonderfully great time to invest, because given the strong national economy the market is due to keep climbing and recoup the setback from the latest crash, so staying on the sidelines is losing out. Notice how that's no less informed about the future than your wild speculation?
- shostack 11y ago
  Thanks for this. I keep seeing all these doomsday posts of people feeling like there is an axe hanging over their heads waiting for it to drop. The same is true about the real estate market. The reality is that outside of a few people, the last crash was largely unanticipated. Just as with that crash, the next one is likely to be another black swan event we cannot predict. Black swan events don't stick to a schedule and you can't time the market.
  - roymurdock 11y ago
    Market sentiment is a powerful force. Never underestimate a critical mass of pessimism/optimism, no matter how irrational.

3pt14159 11y ago

I generally agree - it's mostly a UI as a service (although, there might be some economics of scale there since not everyone can buy 100 Apple stocks at a time), but there is one aspect that I think is unexploited: the pre-sell. Essentially I know a lot of retail investors that if you told them "Would you sell this stock if it went up by 20% in the next 6 months?" they would answer "yes" and they might even put in a market limit order ahead of time, but they don't ever sell covered calls. A nice interface for this could really help retail investors.