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The line that stands out most to me concerns the driving force behind the obsession with Robinhood - the confetti and emoji-filled notifications that make it in

The line that stands out most to me concerns the driving force behind the obsession with Robinhood - the confetti and emoji-filled notifications that make it into a game. It reminds me of the stories of children spending hundreds of dollars on apps like "Clash of Clans" and "Smurfs' Village" only for their parents to find out when they see the bill. Only now it's the parents that are getting taken advantage of. As social media and TikTok-like products shorten our attention spans and continue providing instant gratification, it will become easier and easier to take advantage of people. These aspects, coupled with making the user feel smart (think "I'm a Wall Street trader"), and giving them the potential to make lots of money, may start getting applied to other spaces and could have drastic effects.

gkoberger 6y ago
Well, is the counter true? That investing should feel like a corporate sludge, overcomplicated to anyone who isn't lucky enough to have someone to show them how? Investing is scary for most people. I think a positive spin is that Robinhood makes it so groups of people underrepresented in stock trading can participate. The stock market already is a game, and it's being played by rich people making themselves richer. Isn't it cool that a 22 year old with $100 can get involved, and it's not just old rich people who benefit from the system? The stock market is soaring, despite millions being out of work in the US. The US has two different economies, and I'm all for anything that gives the latter group the same tools the former group has.
- tripletao 6y ago
  Stock investing (i.e., owning stock for a long time, ideally with diversification, hoping to profit from new economic value created by the companies you own) is positive-sum, and I agree that it's beneficial to encourage that. Stock trading (i.e., buying and selling stocks over short periods, hoping to profit from short-term changes in price) is a zero-sum game of skill played against full-time professionals, with predictable results for an uninformed amateur. Do you really think that 22-year-old is going to buy $100 worth of SPY and watch excitedly for their quarterly fifty-cent dividend? Or will they make a bunch of emotional trades, each one transferring some fraction of their hard-earned money (not every time, but in an expected value sense) to a professional's algorithm? Robinhood's marketing and user interface are designed to encourage the latter, and I believe that's net harmful to their clients. I'd rather know nothing about the stock market than believe falsely that uninformed trading of single stocks was a good idea. Of course nothing stops you from using Robinhood to buy and hold an index fund; but to the extent their app is designed to encourage you not to, anyone who tries to use it that way is stealing cheese from mousetraps. New investors would be far better off going to Vanguard or similar, even if they have to save up a bit longer to meet the minimums.
- dlp211 6y ago
  Investing has been simplified to the point that you buy a single low cost target retirement fund and call it a day. You don't need to know more than that. The next step is to of course replicate that target date portfolio using the individual funds, thus reducing the expense ratio. Anything beyond that is pure luck for the vast majority of investors.
  - asdff 6y ago
    Its not that simple, retirement funds are complicated and can be more complicated if you work in different jobs/public or private sector, etc. Maybe you can only put in a certain % of your paycheck. Maybe you can't touch the money without a certain penalty. There are tons of complex rules compared to essentially venmo with equities and crypto.
    - dlp211 6y ago
      Who said anything about using retirement accounts. I said use target date mutual funds. You can buy the Vanguard 2055 TR in a normal brokerage account. You can also get it in an IRA. I will admit that 401k and equivalent accounts can be a pain because you don't get to pick the available funds, but that wasn't the original issue being discussed.
- chrisdirkis 6y ago
  I'm not sure what the interface for trading should be, but some interfaces are definitely meant to have friction. The common example is React's `dangerouslySetInnerHTML`. It's a long and annoying name, with the word "dangerous" in it, it just screams "code smell", and that's the idea. It makes it harder to do the wrong thing, and makes it more likely for only people who know what they're doing to use it. Whether trading/stock markets should have friction, and how much? I honestly don't know. There's obvious questions about nanny states, and giving people freedom to take risks, but there's also large actors taking advantage of the fact that they understand risk more than individuals and exploiting them.
aeternum 6y ago
Robinhood definitely has some questionable tactics but it may actually be a positive. Much better to gain financial literacy when you only have a few thousand, and how else do kids or young adults gain the knowledge, especially if they don't have financially literate parents? Schools don't teach even rudimentary finance. It's very hard to get ahead financially without understanding the power of compound interest or the importance of putting your money to work for you.

gkoberger 6y ago

Well, is the counter true? That investing should feel like a corporate sludge, overcomplicated to anyone who isn't lucky enough to have someone to show them how? Investing is scary for most people. I think a positive spin is that Robinhood makes it so groups of people underrepresented in stock trading can participate. The stock market already is a game, and it's being played by rich people making themselves richer. Isn't it cool that a 22 year old with $100 can get involved, and it's not just old rich people who benefit from the system? The stock market is soaring, despite millions being out of work in the US. The US has two different economies, and I'm all for anything that gives the latter group the same tools the former group has.

tripletao 6y ago
Stock investing (i.e., owning stock for a long time, ideally with diversification, hoping to profit from new economic value created by the companies you own) is positive-sum, and I agree that it's beneficial to encourage that. Stock trading (i.e., buying and selling stocks over short periods, hoping to profit from short-term changes in price) is a zero-sum game of skill played against full-time professionals, with predictable results for an uninformed amateur. Do you really think that 22-year-old is going to buy $100 worth of SPY and watch excitedly for their quarterly fifty-cent dividend? Or will they make a bunch of emotional trades, each one transferring some fraction of their hard-earned money (not every time, but in an expected value sense) to a professional's algorithm? Robinhood's marketing and user interface are designed to encourage the latter, and I believe that's net harmful to their clients. I'd rather know nothing about the stock market than believe falsely that uninformed trading of single stocks was a good idea. Of course nothing stops you from using Robinhood to buy and hold an index fund; but to the extent their app is designed to encourage you not to, anyone who tries to use it that way is stealing cheese from mousetraps. New investors would be far better off going to Vanguard or similar, even if they have to save up a bit longer to meet the minimums.
dlp211 6y ago
Investing has been simplified to the point that you buy a single low cost target retirement fund and call it a day. You don't need to know more than that. The next step is to of course replicate that target date portfolio using the individual funds, thus reducing the expense ratio. Anything beyond that is pure luck for the vast majority of investors.
- asdff 6y ago
  Its not that simple, retirement funds are complicated and can be more complicated if you work in different jobs/public or private sector, etc. Maybe you can only put in a certain % of your paycheck. Maybe you can't touch the money without a certain penalty. There are tons of complex rules compared to essentially venmo with equities and crypto.
  - dlp211 6y ago
    Who said anything about using retirement accounts. I said use target date mutual funds. You can buy the Vanguard 2055 TR in a normal brokerage account. You can also get it in an IRA. I will admit that 401k and equivalent accounts can be a pain because you don't get to pick the available funds, but that wasn't the original issue being discussed.
chrisdirkis 6y ago
I'm not sure what the interface for trading should be, but some interfaces are definitely meant to have friction. The common example is React's `dangerouslySetInnerHTML`. It's a long and annoying name, with the word "dangerous" in it, it just screams "code smell", and that's the idea. It makes it harder to do the wrong thing, and makes it more likely for only people who know what they're doing to use it. Whether trading/stock markets should have friction, and how much? I honestly don't know. There's obvious questions about nanny states, and giving people freedom to take risks, but there's also large actors taking advantage of the fact that they understand risk more than individuals and exploiting them.

aeternum 6y ago

Robinhood definitely has some questionable tactics but it may actually be a positive. Much better to gain financial literacy when you only have a few thousand, and how else do kids or young adults gain the knowledge, especially if they don't have financially literate parents? Schools don't teach even rudimentary finance. It's very hard to get ahead financially without understanding the power of compound interest or the importance of putting your money to work for you.