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What exactly are you proposing then? You literally said no retail investor should be purchasing individual stocks. It's not a giant leap then to think that you

by imgabe 5y ago

What exactly are you proposing then? You literally said no retail investor should be purchasing individual stocks. It's not a giant leap then to think that you want to prohibit retail investors from purchasing individual stocks. If that's not what you want, then what do you want? > We're saying that Robinhood is playing an extremely dangerous game with their clients' well-being by promoting risky and irresponsible decision-making around their livelihoods. How does Robinhood promote risky and irresponsible decision making? Robinhood doesn't force anyone to buy stocks. Retail investors have been able to buy stocks since the stock market existed. Robinhood's innovation is to let them do it for $0 commissions, which dramatically decreases risk for small investors. For example, Vanguard charges a $7 commission per trade unless you have hundreds of thousands of dollars invested with them. If you want to invest $100, you will pay $14 in commissions - $7 when you buy and $7 when you sell. Now your investment needs to return at least 14% just to break even. Compare to $0 commissions on Robinhood, now, if the underlying investment makes money at all, you make money. This is a huge benefit for people who only have small amounts to invest. The $7 commission doesn't matter much if you're investing tens of thousands of dollars, it matters a lot if you're investing much less.

stouset 5y ago
> What exactly are you proposing then? You literally said no retail investor should be purchasing individual stocks. It's not a giant leap then to think that you want to prohibit retail investors from purchasing individual stocks. If that's not what you want, then what do you want? I'm not proposing anything. I didn't say anything to even suggest I'm proposing something. All I said is that retail investors, by and large, shouldn't be trading in individual stocks. And they shouldn't! It's a demonstrably less-successful investment strategy on average than index investing. Especially for completely novice investors. "Nobody should be feeding chocolate to their dog. " "No parent should use an iPad as a substitute for actually raising their child." "Nobody should buy a home warranty, they almost never end up paying out." Which of these statements do you think are even remotely close to advocating for government intervention? > How does Robinhood promote risky and irresponsible decision making? Robinhood doesn't force anyone to buy stocks. In what universe are "promoting" and "forcing" equivalent verbs? Why can't it simply be true that encouraging financially illiterate people to day trade is just an unfathomably irresponsible idea? All of the available evidence supports this assertion. Sure, some people will do better than others; that's the nature of statistical distributions. But on the whole, day traders do measurably worse than buy-and-hold index investors. That's not a claim that all of Robinhood's customers are financially illiterate. Nor is it a value judgment against those who are. It's simply a statement that Robinhood explicitly markets their services towards people with little to no financial background, and everything about their in-app experience is designed to encourage a style of trading that is drastically more likely to leave those customers less well off than more boring approaches. And—very potentially—less well off than just leaving their money under the mattress. Countless retail investors lost absolutely everything by selling during the recession. Do you expect Robinhood's customers to do better on average or worse than average in the next one? > Robinhood's innovation is to let them do it for $0 commissions Robinhood's "innovation" is gamifying the whole thing and taking advantage of meme culture. If they'd managed to do that for boring-as-shit index funds, that would have been an achievement of absolutely immeasurable value. Instead all they've done is found a way to bring fresh, unsuspecting bait to the sharks' feeding grounds. > For example, Vanguard charges a $7 commission per trade unless you have hundreds of thousands of dollars invested with them. If you want to invest $100, you will pay $14 in commissions - $7 when you buy and $7 when you sell. Now your investment needs to return at least 14% just to break even. No retail investor should be purchasing individual stocks. Vanguard has $0 fees for index funds, which is where the overwhelming majority of retail investors should be putting their savings. And at those numbers, the transparent costs of expense ratios are essentially nonexistent.

by imgabe 5y ago

stouset 5y ago

> What exactly are you proposing then? You literally said no retail investor should be purchasing individual stocks. It's not a giant leap then to think that you want to prohibit retail investors from purchasing individual stocks. If that's not what you want, then what do you want? I'm not proposing anything. I didn't say anything to even suggest I'm proposing something. All I said is that retail investors, by and large, shouldn't be trading in individual stocks. And they shouldn't! It's a demonstrably less-successful investment strategy on average than index investing. Especially for completely novice investors. "Nobody should be feeding chocolate to their dog. " "No parent should use an iPad as a substitute for actually raising their child." "Nobody should buy a home warranty, they almost never end up paying out." Which of these statements do you think are even remotely close to advocating for government intervention? > How does Robinhood promote risky and irresponsible decision making? Robinhood doesn't force anyone to buy stocks. In what universe are "promoting" and "forcing" equivalent verbs? Why can't it simply be true that encouraging financially illiterate people to day trade is just an unfathomably irresponsible idea? All of the available evidence supports this assertion. Sure, some people will do better than others; that's the nature of statistical distributions. But on the whole, day traders do measurably worse than buy-and-hold index investors. That's not a claim that all of Robinhood's customers are financially illiterate. Nor is it a value judgment against those who are. It's simply a statement that Robinhood explicitly markets their services towards people with little to no financial background, and everything about their in-app experience is designed to encourage a style of trading that is drastically more likely to leave those customers less well off than more boring approaches. And—very potentially—less well off than just leaving their money under the mattress. Countless retail investors lost absolutely everything by selling during the recession. Do you expect Robinhood's customers to do better on average or worse than average in the next one? > Robinhood's innovation is to let them do it for $0 commissions Robinhood's "innovation" is gamifying the whole thing and taking advantage of meme culture. If they'd managed to do that for boring-as-shit index funds, that would have been an achievement of absolutely immeasurable value. Instead all they've done is found a way to bring fresh, unsuspecting bait to the sharks' feeding grounds. > For example, Vanguard charges a $7 commission per trade unless you have hundreds of thousands of dollars invested with them. If you want to invest $100, you will pay $14 in commissions - $7 when you buy and $7 when you sell. Now your investment needs to return at least 14% just to break even. No retail investor should be purchasing individual stocks. Vanguard has $0 fees for index funds, which is where the overwhelming majority of retail investors should be putting their savings. And at those numbers, the transparent costs of expense ratios are essentially nonexistent.