3 ms·

First strange thing: this post just mentions GameStop and leaves that hanging in the air without explanation. I assume this is because of the sale of order flow

by cletus 5y ago

First strange thing: this post just mentions GameStop and leaves that hanging in the air without explanation. I assume this is because of the sale of order flow at Ronbinhood in particular but it still seems odd. Second, the real estate thing is a weird tangent. I just don't buy that adding an intermediary to real estate transactions is the win-win-win claimed. This seems like a weird detour to justify Opendoor (which, it should be noted, A16Z was an investor in). Let me use this as an analogy though. Imagine the NBBO-equivalent for house sales was a 10% broker fee split between buyer's broker and seller's broker. What this post is arguing is that the sale of order flow is fine because most people pay less than 10% this way. Thing is, once you decide to buy or sell that house, you're doing so without necessarily knowing what the price will be or how much commission you'll pay other than "probably less than 10%". Whoever is processing that is free to take that buy or sell order and then act before processing it. In financial markets, this is called frontrunning. Some markets allow it, some don't. Worse, you as an investor have less visibility into what's going on because these trades through a variety of different brokerages or exchanges can essentially occur off-market. So I'm not buying whatever this is selling. Side note: I honestly don't understand the popularity of Robinhood. It's amazing how willing many on HN are to castigate ad-supported models and the sale of user data while seemingly at the same time being completely fine with the sale of their order flow.

djbusby 5y ago
Robinhood is fun! Really. Like, compared to IB, TD or Fidelity it's FUN. And game-ified so it had a cute ding when you get a green up arrow! A Skinner Box for your money management. Humans (and rats) love to press the lever to get the reward.
- hckrnrd 5y ago
  I wholeheartedly agree. Compared to ToS and IB, RH makes derivative gambling a blast. At least the platform calls a spade a spade—it’s not for the boggle heads, but rather for those interested in taking on risk. And if your investment time horizon is measured in decades, instead of years, it makes perfect sense to me.
andreareina 5y ago
The intermediary offers the ability to transact right away. If the seller thinks this is worth the discount then they'll sell and that's a win for them. If the buyer thinks that's worth the premium then they'll buy and that's a win for them. The intermediary gets paid so that's a win as well. Getting too deep into the stock market/NBBO analogy breaks down because houses aren't undifferentiated fungible assets and so the details don't line up.

by cletus 5y ago

djbusby 5y ago

Robinhood is fun! Really. Like, compared to IB, TD or Fidelity it's FUN. And game-ified so it had a cute ding when you get a green up arrow! A Skinner Box for your money management. Humans (and rats) love to press the lever to get the reward.

hckrnrd 5y ago
I wholeheartedly agree. Compared to ToS and IB, RH makes derivative gambling a blast. At least the platform calls a spade a spade—it’s not for the boggle heads, but rather for those interested in taking on risk. And if your investment time horizon is measured in decades, instead of years, it makes perfect sense to me.

andreareina 5y ago

The intermediary offers the ability to transact right away. If the seller thinks this is worth the discount then they'll sell and that's a win for them. If the buyer thinks that's worth the premium then they'll buy and that's a win for them. The intermediary gets paid so that's a win as well. Getting too deep into the stock market/NBBO analogy breaks down because houses aren't undifferentiated fungible assets and so the details don't line up.