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> It's bad if your core business is getting unsophisticated people making trades (bets) with credit I would agree, if there were evidence to support that prima

by lend000 10y ago

> It's bad if your core business is getting unsophisticated people making trades (bets) with credit I would agree, if there were evidence to support that primarily unsophisticated people are buying premium. However, I doubt this is the case (I'm sure someone will put together numbers on this eventually). I'm a competent trader who avoids leverage, simply because I don't want to pay for a membership (it's not just a loan; you need a gold membership, too, which is an added barrier to entry).

AndrewKemendo 10y ago
Which is exactly my point. Based on what the stated publicly, it's in Robinhood's interest as a company to push everyone into Margin deals. Their core stated benefit of using Robinhood over other brokers is opening trading up to everyone, through ease and low carry to make it easy. Ipso Facto that means their goal will be pushing new unsophisticated traders into leveraged deals. That is 100% implicit in this whole thing. I'm not arguing that there is evidence that "primarily unsophisticated people are buying premium." I'm arguing that this is their plan going forward and it could be really really harmful to markets if they get to the scale they want to. Best case, Robinhood can cover every margin call themselves, in which case they are effectively doing what Uber does which is unsustainably subsidizing investing on credit. Worst case, they can't cover margin calls and neither can their users and they roll up. I'm just waiting for them to allow leveraged shorts...