7 ms·

Robinhoods advertising is disgusting. Encouraging people who make very little money to gamble that money on the stock market is just taking advantage of those w

Robinhoods advertising is disgusting. Encouraging people who make very little money to gamble that money on the stock market is just taking advantage of those who don't know any better - do you really expect to compete with the investors paying 20k for a Bloomberg terminal, who get all the news 15 minutes before you can even hear about it? If they had been advertising about how low their fees are, and how you can invest your savings in ETFs or something I would have no problem with it since that is a reasonable thing to do. But suggesting that the average low income person should be day trading is just predatory. I even saw an ad (not 100% sure if it was Robinhood but a similar product) that was telling a story about how someone was in tens of thousands of dollars in debt, and day traded until they were out of debt. All these trading apps seem to be targeted at people who will almost certainly lose money, and who generally don't have much to lose. I mean I have no problem with an app advertising an easy way to do day trading, just don't act as if it is anything other than gambling.

wave_function 6y ago
Example Robinhood ad: https://vimeo.com/300397341 https://vimeo.com/300397341
- brundolf 6y ago
  Wow, this is so targeted.
- glglwty 6y ago
  That's the kind of ads worth saving for future reference
swyx 6y ago
as someone who's had the bloomberg terminal for 6 years - trust me, we feel way behind HFTs :) the 20k isn't for the newsflashes.
C1sc0cat 6y ago
And this pitching fractional shares to novices really you should have ben investing in etf's/funds for years before you think about individual shares
- hakfoo 6y ago
  I agree that ETFs are the sane default choice (assuming you curate the choices to low-fees and sensible aims). But there are definitely places where individual consumers can feel close enough to the ground to feel some specific market trends. For example, just look at the how many PC hobbyists made a mint on AMD shares just by noticing "they launched a killer product in a time period when their biggest competitor has been whiffing badly?" They may not time the market perfectly, but plenty of them will end up well in the green. This is really the classic, pre-ETF/mutual fund stock-investment model, though-- long holds and relying on actual performance, rather than day-trading and riding on volatility or diversified large numbers.
solarman5000 6y ago
I signed up on Robinhood and made a killing doing day trading, until the govt stepped in to 'protect' me from playing this rich man game. I think giving regular people a way to easily join the stock market could help fix some of the problems with capitalism. People need to know their strength in numbers, and that corporations are only answerable to their shareholders
erulabs 6y ago
I'm not sure I can say I'm disgusted by assuming hourly workers are intelligent. Why is it that investing is gambling only for the poor? Is the implication the poor people are less informed and less intelligent? > do you really expect to compete with the investors paying 20k for a Bloomberg terminal, who get all the news 15 minutes before you can even hear about it? Not if you're day trading, of course not. But letting someone who stocks sodas all day buy a couple Pepsi shares seems highly legitimate. The stock market will be more intelligent with more opinions in the pool, not less.
- actusual 6y ago
  So, IQ and income are related, but I'm not sure if the causal arrow points both ways. Secondly, I think the 1) make an emergency fund 2) pay debt via snowball method then finally, 3) invest for retirement hierarchy is the most effective path to financial freedom, and given that poor people are more likely to have debt and no emergency funds, it's an okay assumption that they are investing prematurely if they haven't taken care of items 1 & 2.
  - PascLeRasc 6y ago
    IQ is fake [1], but anyway Robinhood isn't purporting to be a personal finance flowchart. Vanguard would be the opposite of Robinhood and they don't help you establish an emergency fund or pay off debt, or do any checks on if you're rich enough to invest. Robinhood's just another brokerage with a clean UI. [1] https://medium.com/incerto/iq-is-largely-a-pseudoscientific-swindle-f131c101ba39 https://medium.com/incerto/iq-is-largely-a-pseudoscientific-... (you can read the articles linked in this if Medium isn't credible enough)
- GhostVII 6y ago
  Stock picking is gambling for pretty much everyone, even professionals don't beat the market most of the time. Income is somewhat correlated with intelligence, but thats not the issue I have with marketing to lower income people, since as you said there are lots of very smart people at all income levels. The problem is that lower income people have less to lose, and are less able to recover from losses, so I am more concerned with them loosing money than if a well paid professional looses their bonus or something in the market. Also lower income people are more likely to try more risky methods of getting money, and are more likely a member of a vulnerable demographic (ex. pyramid schemes have a lot of success targetting recent immigrants without much income). I think there is a lot of value in letting someone who stocks sodas all day buy some Pepsi stock if they have some money free to play around with. I've done some day trading, it's a little fun (and a lot stressful, so no more). The problem I have is when Robinhood tries to convince that person stocking sodas that they have some special insight that will let them beat the market and make money investing. That's how you get people investing and loosing more than they can afford.
pradn 6y ago
The biggest problem is how Robinhood promotes trading individual stocks and cryptos, often with leverage. I'd laud them as a democratizing force if they guided people into safe long-term investments. But that's not what gets the buzz, and it's not what gets them more users.
- rokobobo 6y ago
  I believe RH's revenue is mostly from payment for order flow (as opposed to, say, interest on AUM), so on top of what gets them more users, higher trading activity is what gets them more dollars.
x87678r 6y ago
Those etrade ads were just as bad. https://www.youtube.com/watch?v=WZdKI8e_avw https://www.youtube.com/watch?v=WZdKI8e_avw
smabie 6y ago
If you're poor, you're not even allowed to day trade.
alpineidyll3 6y ago
The selling the orderflow to citadel is the gross part. Not allowing people to participate in a market.
TrackerFF 6y ago
I'd argue that a lot of (new) Robinhood traders aren't traders or investors - they're gamblers. Just plain old gamblers.
tfehring 6y ago
To the extent that they're advertising - or even just increasing the availability of - derivatives trading to unsophisticated retail investors, I agree with you. But taking unlevered long positions in individual stocks is not that much worse than investing in ETFs, and saving money to take unlevered long positions in individual stocks, for someone who would otherwise not be saving much money (and who might otherwise be literally playing the lottery with that money) is often a drastic improvement. After all, it's just as hard to underperform the market by picking stocks as it is to outperform it; while the risk-adjusted expected return is worse due to the lack of diversification, the non-risk-adjusted expected return those traders will get will equal the market return, with some degenerate exceptions like Hertz.
mandeepj 6y ago
> who get all the news 15 minutes before you can even hear about it? It does not really matter if you are in for long haul, and you should be. Stock market should not be played like a poker play where you need to keep an eye on every single move. If that's the way you are doing it then it's a gamble.
probe 6y ago
The more people invest in ETFs/indexes/passively, the more opportunity there will be for active traders (indices by definition are adjusted to average and leave underpriced assets in the index), and so I don't think it's that surprising we're seeing more people try. What to do with money is kind of like politics - people have different risk preferences/processes/deep rooted beliefs on what is right. And like politics, there is "no one right answer" but instead what compromises one wishes to make and what is relevant to their specific situation (ex. gun holders in middle of nowhere farmland vs. anti-gun urban dwellers). I think Robinhood is net positive and kind of like political voting in that way - it empowers people to do something they couldn't before, and allow them to test their value systems in the real world.

wave_function 6y ago

Example Robinhood ad: https://vimeo.com/300397341 https://vimeo.com/300397341

brundolf 6y ago
Wow, this is so targeted.
glglwty 6y ago
That's the kind of ads worth saving for future reference

swyx 6y ago

as someone who's had the bloomberg terminal for 6 years - trust me, we feel way behind HFTs :) the 20k isn't for the newsflashes.

C1sc0cat 6y ago

And this pitching fractional shares to novices really you should have ben investing in etf's/funds for years before you think about individual shares

hakfoo 6y ago
I agree that ETFs are the sane default choice (assuming you curate the choices to low-fees and sensible aims). But there are definitely places where individual consumers can feel close enough to the ground to feel some specific market trends. For example, just look at the how many PC hobbyists made a mint on AMD shares just by noticing "they launched a killer product in a time period when their biggest competitor has been whiffing badly?" They may not time the market perfectly, but plenty of them will end up well in the green. This is really the classic, pre-ETF/mutual fund stock-investment model, though-- long holds and relying on actual performance, rather than day-trading and riding on volatility or diversified large numbers.

solarman5000 6y ago

I signed up on Robinhood and made a killing doing day trading, until the govt stepped in to 'protect' me from playing this rich man game. I think giving regular people a way to easily join the stock market could help fix some of the problems with capitalism. People need to know their strength in numbers, and that corporations are only answerable to their shareholders

erulabs 6y ago

I'm not sure I can say I'm disgusted by assuming hourly workers are intelligent. Why is it that investing is gambling only for the poor? Is the implication the poor people are less informed and less intelligent? > do you really expect to compete with the investors paying 20k for a Bloomberg terminal, who get all the news 15 minutes before you can even hear about it? Not if you're day trading, of course not. But letting someone who stocks sodas all day buy a couple Pepsi shares seems highly legitimate. The stock market will be more intelligent with more opinions in the pool, not less.

actusual 6y ago
So, IQ and income are related, but I'm not sure if the causal arrow points both ways. Secondly, I think the 1) make an emergency fund 2) pay debt via snowball method then finally, 3) invest for retirement hierarchy is the most effective path to financial freedom, and given that poor people are more likely to have debt and no emergency funds, it's an okay assumption that they are investing prematurely if they haven't taken care of items 1 & 2.
- PascLeRasc 6y ago
  IQ is fake [1], but anyway Robinhood isn't purporting to be a personal finance flowchart. Vanguard would be the opposite of Robinhood and they don't help you establish an emergency fund or pay off debt, or do any checks on if you're rich enough to invest. Robinhood's just another brokerage with a clean UI. [1] https://medium.com/incerto/iq-is-largely-a-pseudoscientific-swindle-f131c101ba39 https://medium.com/incerto/iq-is-largely-a-pseudoscientific-... (you can read the articles linked in this if Medium isn't credible enough)
GhostVII 6y ago
Stock picking is gambling for pretty much everyone, even professionals don't beat the market most of the time. Income is somewhat correlated with intelligence, but thats not the issue I have with marketing to lower income people, since as you said there are lots of very smart people at all income levels. The problem is that lower income people have less to lose, and are less able to recover from losses, so I am more concerned with them loosing money than if a well paid professional looses their bonus or something in the market. Also lower income people are more likely to try more risky methods of getting money, and are more likely a member of a vulnerable demographic (ex. pyramid schemes have a lot of success targetting recent immigrants without much income). I think there is a lot of value in letting someone who stocks sodas all day buy some Pepsi stock if they have some money free to play around with. I've done some day trading, it's a little fun (and a lot stressful, so no more). The problem I have is when Robinhood tries to convince that person stocking sodas that they have some special insight that will let them beat the market and make money investing. That's how you get people investing and loosing more than they can afford.

pradn 6y ago

The biggest problem is how Robinhood promotes trading individual stocks and cryptos, often with leverage. I'd laud them as a democratizing force if they guided people into safe long-term investments. But that's not what gets the buzz, and it's not what gets them more users.

rokobobo 6y ago
I believe RH's revenue is mostly from payment for order flow (as opposed to, say, interest on AUM), so on top of what gets them more users, higher trading activity is what gets them more dollars.

x87678r 6y ago

Those etrade ads were just as bad. https://www.youtube.com/watch?v=WZdKI8e_avw https://www.youtube.com/watch?v=WZdKI8e_avw

smabie 6y ago

If you're poor, you're not even allowed to day trade.

alpineidyll3 6y ago

The selling the orderflow to citadel is the gross part. Not allowing people to participate in a market.

TrackerFF 6y ago

I'd argue that a lot of (new) Robinhood traders aren't traders or investors - they're gamblers. Just plain old gamblers.

tfehring 6y ago

To the extent that they're advertising - or even just increasing the availability of - derivatives trading to unsophisticated retail investors, I agree with you. But taking unlevered long positions in individual stocks is not that much worse than investing in ETFs, and saving money to take unlevered long positions in individual stocks, for someone who would otherwise not be saving much money (and who might otherwise be literally playing the lottery with that money) is often a drastic improvement. After all, it's just as hard to underperform the market by picking stocks as it is to outperform it; while the risk-adjusted expected return is worse due to the lack of diversification, the non-risk-adjusted expected return those traders will get will equal the market return, with some degenerate exceptions like Hertz.

mandeepj 6y ago

> who get all the news 15 minutes before you can even hear about it? It does not really matter if you are in for long haul, and you should be. Stock market should not be played like a poker play where you need to keep an eye on every single move. If that's the way you are doing it then it's a gamble.

probe 6y ago

The more people invest in ETFs/indexes/passively, the more opportunity there will be for active traders (indices by definition are adjusted to average and leave underpriced assets in the index), and so I don't think it's that surprising we're seeing more people try. What to do with money is kind of like politics - people have different risk preferences/processes/deep rooted beliefs on what is right. And like politics, there is "no one right answer" but instead what compromises one wishes to make and what is relevant to their specific situation (ex. gun holders in middle of nowhere farmland vs. anti-gun urban dwellers). I think Robinhood is net positive and kind of like political voting in that way - it empowers people to do something they couldn't before, and allow them to test their value systems in the real world.