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This is a bad analogy. Lower-limit poker tables attract lower-skilled players for the reason you give, which means you're playing against lower-skilled opponent

This is a bad analogy. Lower-limit poker tables attract lower-skilled players for the reason you give, which means you're playing against lower-skilled opponents[1]. In the stock market, you're always playing against the world's top professionals and their computers. As in any game with a random element, unskilled players still sometimes win, but on average they lose. Investing isn't gambling, and Robinhood's conflation of the two is exactly the reason to criticize them. It's very likely that a share of SPY will be worth more in real terms thirty years from now than it is today, and that makes it a useful vehicle to save for retirement. What it does in the next day, month, year, or even decade is much harder to predict. By encouraging naive users to trade frequently, Robinhood is encouraging users to expose themselves to that short-term volatility, with no benefit except fulfillment of an urge to gamble. 1. Unless you're playing online against some guy with a bunch of fake identities and a bot. Is that still a thing?

nickjj 6y ago
> This is a bad analogy. The analogy I was going for was this person took what sounds like his entire savings and then took loaned money against his house and put it all into trading super high variance options. I'm not an experienced trader but I occasionally talk to some. They all say options trading like that is a massive gamble. There's a big difference between long term investing into an ETF and doing what this person did. He could have chosen to put $500 into his account and hand picked some stocks or ETFs and then watched it grow or shrink over time as he learns how to trade but instead he chose to use 15k+ and then 2 big loans on high variance moves to either hit it big or go bust in a very short time frame. It just happened in this case he busted. I think he would have had the same outcome on another platform if Robinhood didn't exist.
- tripletao 6y ago
  Hard to judge to what extent he was nudged by Robinhood's marketing and UI towards risk-taking vs. initially predisposed. I agree that most other brokerages allow--and often even encourage, just less effectively--their customers to take similar risks. The difference is just that Robinhood seems unusually good at the "encouraging", with UI frills like the confetti and such, and their customers do anecdotally seem unusually prone to blowing up. I'd re-emphasize my point as to your opponent's skill. Poker (or most other games of combined chance and skill) gives you an opportunity to practice both at lower stakes and against less skilled opponents. In the public markets, you can risk as little as you want, but you're always playing against the world's best counterparties, unless you can find some instrument that's both too small to be worth the professionals' specific attention and too distinctive for their existing algorithms to generalize.

nickjj 6y ago

> This is a bad analogy. The analogy I was going for was this person took what sounds like his entire savings and then took loaned money against his house and put it all into trading super high variance options. I'm not an experienced trader but I occasionally talk to some. They all say options trading like that is a massive gamble. There's a big difference between long term investing into an ETF and doing what this person did. He could have chosen to put $500 into his account and hand picked some stocks or ETFs and then watched it grow or shrink over time as he learns how to trade but instead he chose to use 15k+ and then 2 big loans on high variance moves to either hit it big or go bust in a very short time frame. It just happened in this case he busted. I think he would have had the same outcome on another platform if Robinhood didn't exist.

tripletao 6y ago
Hard to judge to what extent he was nudged by Robinhood's marketing and UI towards risk-taking vs. initially predisposed. I agree that most other brokerages allow--and often even encourage, just less effectively--their customers to take similar risks. The difference is just that Robinhood seems unusually good at the "encouraging", with UI frills like the confetti and such, and their customers do anecdotally seem unusually prone to blowing up. I'd re-emphasize my point as to your opponent's skill. Poker (or most other games of combined chance and skill) gives you an opportunity to practice both at lower stakes and against less skilled opponents. In the public markets, you can risk as little as you want, but you're always playing against the world's best counterparties, unless you can find some instrument that's both too small to be worth the professionals' specific attention and too distinctive for their existing algorithms to generalize.