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> Exactly. Applauding them for lowering trading fees to $0 is like applauding a pharmaceutical company for bringing down the cost of opiates. Or applauding a ci

> Exactly. Applauding them for lowering trading fees to $0 is like applauding a pharmaceutical company for bringing down the cost of opiates. Or applauding a cigarette maker for making cigarettes cheaper. Trading stocks doesn't lead people to physical dependence, nor does it typically ruin their lives. Buy-and-hold will almost always lead to returns, provided that a portfolio is diversified enough. Smoking, taking opiates recreationally, etc. almost always lead to premature death. Robinhood (and Wall Street overall) isn't beyond criticism, but this seems like a particularly bonkers analogy.

__jem 6y ago
> Buy-and-hold will almost always lead to returns, provided that a portfolio is diversified enough. Smoking, taking opiates recreationally, etc. almost always lead to premature death. This is ignoring the original point, though. Commission fees are practically irrelevant to a buy and hold strategy because of the time scales involved. Commission fees only matter for trading, which does in fact ruin lives.
- krastanov 6y ago
  What about people who put $100 a week in. Paying commissions on this, each week, is definitely unworkable. Was it possible before to do before Robinhood?
  - sgerenser 6y ago
    Yes, most platforms had either no-transaction-fee index mutual funds or free etf trades. This generally didn’t apply to individual stocks but someone just putting away $100/week savings should be avoiding individual stocks anyway.
- handmodel 6y ago
  In many ways a world where there were some baseline fees and it was annoying to sign up made it so no regulation was needed. Because it was naturally a bit burdensome to get started, there was no need to make law on it. I don't trust anything to be done about it in 2020 - but it is clear if this was a time when regulators had a bit more sway that basic rules would be put in place to make this type of gambling behavior hard.
hef19898 6y ago
Gameification of investing can only be a bad thing, because it turns investing into basically legal gambling. And gambling very much leads to addiction and financial struggles. Making investing easy due to a low entry barrier, combined with the advertising, seems to very much have that goal. For long term investments, low fees per trade don't matter. And with day trading the retail investors will always lose against the HFT guys. The only people profiting from average joes doing day trading are the HFT funds and companies like Robinhood.
- noahtallen 6y ago
  Though I agree with you that the stock market is more gambling, I do not agree that it is because of Robinhood. It’s a byproduct of how the stock price isn’t based in reality: it’s just based on investor perceptions. I don’t think the “barrier” of trading fees is really enough to say that it’s not about gambling in the first place. I might even go as far as saying that it’s purely accidental that the stock of a reputable company will likely go up. If investors get into a feedback loop of “investors don’t want to buy X stock”, the stock price will plummet regardless of how well the company actually does. You have to have enough investors with faith in the stock for it to stay up. I think we’d do better judging the stock market for this systematic issue rather than some app which makes it easier to exploit that issue. Is robinhood part of the problem? Sure. But it’s not at the root of the problem.
  - hef19898 6y ago
    I absolutely agree. I don't remember where it comes from, but the stock market was discribed as "trading today hopes for tomorrow based on yesterday's information". Robinhood, and others (i am so fed up by YouTube adds for Etoro, Traderepublic and so on) are just using this fact. Both things are a problem. And the very root seems to be greed, not sure of that can be fixed.
- filoleg 6y ago
  >Gameification of investing can only be a bad thing I keep seeing people referring to RH somehow "gamifying" the experience, but I just don't see it, it feels like just throwing a buzzword at RH until that buzzword sticks. The only thing they did in terms of UI is made it very simple and convenient to use. If that's what counts as "gamification" in 2020, then I am all for it. I just thought that this term usually referred for stuff like "achievements", some goals/scores, objectives completed, etc. RH has none of that. All it has is a very good UI that is pleasant to use. If someone could clarify what RH does that constitutes "gamification", I am curious to hear.
bostik 6y ago
> Trading stocks doesn't lead people to physical dependence, nor does it typically ruin their lives. While this is true, what RH have done is turn trading into a form of gambling. That industry is HEAVILY regulated, and for a good reason: gambling addiction has ruined enough families' lives to warrant strict - and increasingly invasive - responsible gambling controls.[ß] One of the most effective controls we have for gambling guardrails is the absolute rule of not allowing anyone to bet on credit. Not only do we block credit card deposits, we also have to restrict depositing via methods that themselves allow funding through credit cards. RH, on the other hand, has taken fire for not only allowing margin trades, but making it all too easy for non-institutionals to: A) trade on margin (read: bet on credit) - and B) trade complex options where the downside can be multiples of the perceived execution amounts A gambling company doing this would have their license revoked and likely have their directors hauled before regulators to answer some very uncomfortable questions. > Buy-and-hold will almost always lead to returns, provided that a portfolio is diversified enough. Also true. But please keep in mind that RH encourages its userbase to engage in back-and-forth trading, using design tricks and visual cues to trigger impulses.[0] A responsible retail investor executing a long-term trade for a few thousand every two months is not the customer Robinhood makes their money out of. Stating the obvious: I work for a gambling company. ß: I have a pending piece on the various privacy invasions our industry is forced to engage in, but the first versions did not sit well with our comms team. 0: Before his leave, Matt Levine wrote about RH dropping at least some of the worst aspects: https://www.bloomberg.com/opinion/articles/2020-08-10/robinhood-ends-its-popularity-contest https://www.bloomberg.com/opinion/articles/2020-08-10/robinh...

__jem 6y ago

> Buy-and-hold will almost always lead to returns, provided that a portfolio is diversified enough. Smoking, taking opiates recreationally, etc. almost always lead to premature death. This is ignoring the original point, though. Commission fees are practically irrelevant to a buy and hold strategy because of the time scales involved. Commission fees only matter for trading, which does in fact ruin lives.

krastanov 6y ago
What about people who put $100 a week in. Paying commissions on this, each week, is definitely unworkable. Was it possible before to do before Robinhood?
- sgerenser 6y ago
  Yes, most platforms had either no-transaction-fee index mutual funds or free etf trades. This generally didn’t apply to individual stocks but someone just putting away $100/week savings should be avoiding individual stocks anyway.
handmodel 6y ago
In many ways a world where there were some baseline fees and it was annoying to sign up made it so no regulation was needed. Because it was naturally a bit burdensome to get started, there was no need to make law on it. I don't trust anything to be done about it in 2020 - but it is clear if this was a time when regulators had a bit more sway that basic rules would be put in place to make this type of gambling behavior hard.

hef19898 6y ago

Gameification of investing can only be a bad thing, because it turns investing into basically legal gambling. And gambling very much leads to addiction and financial struggles. Making investing easy due to a low entry barrier, combined with the advertising, seems to very much have that goal. For long term investments, low fees per trade don't matter. And with day trading the retail investors will always lose against the HFT guys. The only people profiting from average joes doing day trading are the HFT funds and companies like Robinhood.

noahtallen 6y ago
Though I agree with you that the stock market is more gambling, I do not agree that it is because of Robinhood. It’s a byproduct of how the stock price isn’t based in reality: it’s just based on investor perceptions. I don’t think the “barrier” of trading fees is really enough to say that it’s not about gambling in the first place. I might even go as far as saying that it’s purely accidental that the stock of a reputable company will likely go up. If investors get into a feedback loop of “investors don’t want to buy X stock”, the stock price will plummet regardless of how well the company actually does. You have to have enough investors with faith in the stock for it to stay up. I think we’d do better judging the stock market for this systematic issue rather than some app which makes it easier to exploit that issue. Is robinhood part of the problem? Sure. But it’s not at the root of the problem.
- hef19898 6y ago
  I absolutely agree. I don't remember where it comes from, but the stock market was discribed as "trading today hopes for tomorrow based on yesterday's information". Robinhood, and others (i am so fed up by YouTube adds for Etoro, Traderepublic and so on) are just using this fact. Both things are a problem. And the very root seems to be greed, not sure of that can be fixed.
filoleg 6y ago
>Gameification of investing can only be a bad thing I keep seeing people referring to RH somehow "gamifying" the experience, but I just don't see it, it feels like just throwing a buzzword at RH until that buzzword sticks. The only thing they did in terms of UI is made it very simple and convenient to use. If that's what counts as "gamification" in 2020, then I am all for it. I just thought that this term usually referred for stuff like "achievements", some goals/scores, objectives completed, etc. RH has none of that. All it has is a very good UI that is pleasant to use. If someone could clarify what RH does that constitutes "gamification", I am curious to hear.

bostik 6y ago

> Trading stocks doesn't lead people to physical dependence, nor does it typically ruin their lives. While this is true, what RH have done is turn trading into a form of gambling. That industry is HEAVILY regulated, and for a good reason: gambling addiction has ruined enough families' lives to warrant strict - and increasingly invasive - responsible gambling controls.[ß] One of the most effective controls we have for gambling guardrails is the absolute rule of not allowing anyone to bet on credit. Not only do we block credit card deposits, we also have to restrict depositing via methods that themselves allow funding through credit cards. RH, on the other hand, has taken fire for not only allowing margin trades, but making it all too easy for non-institutionals to: A) trade on margin (read: bet on credit) - and B) trade complex options where the downside can be multiples of the perceived execution amounts A gambling company doing this would have their license revoked and likely have their directors hauled before regulators to answer some very uncomfortable questions. > Buy-and-hold will almost always lead to returns, provided that a portfolio is diversified enough. Also true. But please keep in mind that RH encourages its userbase to engage in back-and-forth trading, using design tricks and visual cues to trigger impulses.[0] A responsible retail investor executing a long-term trade for a few thousand every two months is not the customer Robinhood makes their money out of. Stating the obvious: I work for a gambling company. ß: I have a pending piece on the various privacy invasions our industry is forced to engage in, but the first versions did not sit well with our comms team. 0: Before his leave, Matt Levine wrote about RH dropping at least some of the worst aspects: https://www.bloomberg.com/opinion/articles/2020-08-10/robinhood-ends-its-popularity-contest https://www.bloomberg.com/opinion/articles/2020-08-10/robinh...