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> it would be very bad PR for people to start thinking that they can lose a lot more than they put into their accounts I don't know if it would be bad PR... Th

> it would be very bad PR for people to start thinking that they can lose a lot more than they put into their accounts I don't know if it would be bad PR... The guy very deliberately leveraged himself because he thought he'd gain social approval from his peers at r/wallstreetbets It's a great public service announcement for: just put your money into index funds and stop trying to gamble on stock earnings.

cortesoft 7y ago
But that is the exact opposite message that Robinhood wants to send (even if it is the correct message).
- MuffinFlavored 7y ago
  I think Robinhood wants to send the message that they offer a simple, elegant stock trading app. I feel (no proof) that they target people with net worths of less than $50k to come and trade a few stocks. AAPL, TSLA, NFLX, MSFT, GOOG, etc. I don't think they actually want you to trade on margin. It's just, some people are addicted to volatility / the chance of "sweet gainz" and they see "regular Joe" posting pictures of turning $1k into $100k by making "the correct lucky" options trade, so they are down to try to do it too. I don't think that's Robinhood's message. It's just a side effect of having an easy to use app with no fees.
  - gowld 7y ago
    RH can simply not offer margin if they don't want their customers to use margin. "not handing out money" is the traditional way that anyone avoids the risk of losing money due to handouts.
  - squeaky-clean 7y ago
    > I don't think they actually want you to trade on margin. Have you used RH? I use it for exactly your example, every other paycheck I put some in VOO and a bit on some individual stocks. They push Robinhood Gold so hard. There used to be a glowing gold banner at the top of your portfolio advertising to join gold and get $10,000 today or whatever.
    - mrep 7y ago
      Why don't you just buy VOO on vanguard considering there is no commission fee on vanguard when buy vanguard ETFs?
      - squeaky-clean 7y ago
        Because I'd still like to buy other stocks. There's also no fee on RH so what is the downside of using RH?
  - alonmower 7y ago
    I disagree. I signed up to check it out and they’ll consistently push notifications about upcoming earnings calls. They’re clearly trying to promote a very short horizon mindset
fyp 7y ago
While we are on the topic of leverage and index funds, can someone explain leveraged index funds to me? If I believe index funds are going to have a positive return, why not try to lever it up as high as possible? For example TQQQ (triple leverage) looks pretty enticing compared to QQQ.
- gr2020 7y ago
  Leveraged index funds generally work as expected on an intraday basis - but they're not intended for longer term holds. You can of course try it, but things will not turn out as you'd hope. Here's an article describing what happens: https://www.investopedia.com/articles/financial-advisors/082515/why-leveraged-etfs-are-not-longterm-bet.asp https://www.investopedia.com/articles/financial-advisors/082...
  - planteen 7y ago
    Outside of tracking error and expense fees, there is a more fundamental issue. When the market goes down X%, you need it to go back up Y = 1/(1-x)-1 to break even. So the market goes down 10.0% one day and then up 11.1% the next, an investor in the normal 1x is back to where they started. A 2x investor is still down and a 3x investor is down even more. So the average daily noise of the market kills you.
    - Pyxl101 7y ago
      > So the market goes down 10.0% one day and then up 11.1% the next, an investor in the normal 1x is back to where they started. A 2x investor is still down and a 3x investor is down even more. Can you explain why that is? I would have expected that your gain or loss from the leverage funds relates only to the difference in price between when you purchased and when you sold (multiplied by the leverage).
      - fred256 7y ago
        The leveraged funds like TQQQ reset their leverage on a daily basis.
tinco 7y ago
Just in case someone doesn't know about r/wsb and thinks it's just a degenerate gambling community.. they're sort of right but there's more to it. It is a community centered around self deprecating humor, basically people enjoy trying to become successful at trading, but they know the reality is that they're not very likely to succeed, so they share their trials and tribulations on r/wsb to make jokes about their own stupidity. Some people are richer, either because they have good jobs, inherited or had prior success, so they lose more and the community enjoys their posts more. The idea that you would do something stupid that costs you more money than you could afford (and possibly gets you into more trouble) just so that a group of people can laugh at you and make jokes at your expense is ridiculous, but I get that some people really crave that sort of attention. It goes a bit far to say that they get "social approval" from the community though.

cortesoft 7y ago

But that is the exact opposite message that Robinhood wants to send (even if it is the correct message).

MuffinFlavored 7y ago
I think Robinhood wants to send the message that they offer a simple, elegant stock trading app. I feel (no proof) that they target people with net worths of less than $50k to come and trade a few stocks. AAPL, TSLA, NFLX, MSFT, GOOG, etc. I don't think they actually want you to trade on margin. It's just, some people are addicted to volatility / the chance of "sweet gainz" and they see "regular Joe" posting pictures of turning $1k into $100k by making "the correct lucky" options trade, so they are down to try to do it too. I don't think that's Robinhood's message. It's just a side effect of having an easy to use app with no fees.
- gowld 7y ago
  RH can simply not offer margin if they don't want their customers to use margin. "not handing out money" is the traditional way that anyone avoids the risk of losing money due to handouts.
- squeaky-clean 7y ago
  > I don't think they actually want you to trade on margin. Have you used RH? I use it for exactly your example, every other paycheck I put some in VOO and a bit on some individual stocks. They push Robinhood Gold so hard. There used to be a glowing gold banner at the top of your portfolio advertising to join gold and get $10,000 today or whatever.
  - mrep 7y ago
    Why don't you just buy VOO on vanguard considering there is no commission fee on vanguard when buy vanguard ETFs?
    - squeaky-clean 7y ago
      Because I'd still like to buy other stocks. There's also no fee on RH so what is the downside of using RH?
- alonmower 7y ago
  I disagree. I signed up to check it out and they’ll consistently push notifications about upcoming earnings calls. They’re clearly trying to promote a very short horizon mindset

fyp 7y ago

While we are on the topic of leverage and index funds, can someone explain leveraged index funds to me? If I believe index funds are going to have a positive return, why not try to lever it up as high as possible? For example TQQQ (triple leverage) looks pretty enticing compared to QQQ.

gr2020 7y ago
Leveraged index funds generally work as expected on an intraday basis - but they're not intended for longer term holds. You can of course try it, but things will not turn out as you'd hope. Here's an article describing what happens: https://www.investopedia.com/articles/financial-advisors/082515/why-leveraged-etfs-are-not-longterm-bet.asp https://www.investopedia.com/articles/financial-advisors/082...
- planteen 7y ago
  Outside of tracking error and expense fees, there is a more fundamental issue. When the market goes down X%, you need it to go back up Y = 1/(1-x)-1 to break even. So the market goes down 10.0% one day and then up 11.1% the next, an investor in the normal 1x is back to where they started. A 2x investor is still down and a 3x investor is down even more. So the average daily noise of the market kills you.
  - Pyxl101 7y ago
    > So the market goes down 10.0% one day and then up 11.1% the next, an investor in the normal 1x is back to where they started. A 2x investor is still down and a 3x investor is down even more. Can you explain why that is? I would have expected that your gain or loss from the leverage funds relates only to the difference in price between when you purchased and when you sold (multiplied by the leverage).
    - fred256 7y ago
      The leveraged funds like TQQQ reset their leverage on a daily basis.

tinco 7y ago

Just in case someone doesn't know about r/wsb and thinks it's just a degenerate gambling community.. they're sort of right but there's more to it. It is a community centered around self deprecating humor, basically people enjoy trying to become successful at trading, but they know the reality is that they're not very likely to succeed, so they share their trials and tribulations on r/wsb to make jokes about their own stupidity. Some people are richer, either because they have good jobs, inherited or had prior success, so they lose more and the community enjoys their posts more. The idea that you would do something stupid that costs you more money than you could afford (and possibly gets you into more trouble) just so that a group of people can laugh at you and make jokes at your expense is ridiculous, but I get that some people really crave that sort of attention. It goes a bit far to say that they get "social approval" from the community though.