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"Last year, we staffed many of our operations functions under the assumption that the heightened retail engagement we had been seeing with the stock and crypto

"Last year, we staffed many of our operations functions under the assumption that the heightened retail engagement we had been seeing with the stock and crypto markets in the COVID era would persist into 2022..." We are now at the point when we will find out which of the changes to behavior (financial and otherwise) that came about with the onset of the covid-19 pandemic are going to be lasting, and which are not. I do not claim to be able to predict which ones (if any) will last, but I can confidently say that Robinhood is not the only one to have been surprised by changes which they thought would "stick", going back to pre-covid norms.

civilized 4y ago
It should have been obvious to anyone that people would do less day trading once they had anything better to do.
- ghaff 4y ago
  And once even throwing darts to pick stocks stopped producing big gains. The same thing basically happened in the run-up to dot-bomb. It was really easy to make book with day-trading in 1999 or so. See also crypto.
- spaceman_2020 4y ago
  Or when making money became harder. Amazing the number of people I personally know who took 1 year of day trading to be the “norm” and made big life decisions based on their results. From quitting good jobs to buying houses they can’t afford, all because they made big money in 2021 and thought they could keep repeating it every year.
  - georgeecollins 4y ago
    This happened in 1998-1999 too. People got online trading accounts, did great and then decided to try to invest for a living. You should not take investment advice from people who have been doing it less than a decade. It takes time to sort out the lucky from the smart.
    - mumblemumble 4y ago
      I would even argue that a decade isn't necessarily enough time. The decade in question might have been the 1990s.
      - t_mann 4y ago
        Or the 2010's.
    - smsm42 4y ago
      Unless you're going to do it for living and really invest hard into educating yourself, I don't think you should also take the investment advice from people who have been doing it for more than a decade, unless the advice is "buy index funds and HODL" (I maybe exaggerate a bit, but boiled down to the essence that'd be it). For a common person that doesn't plan to make a career out of it and spend a lot of time honing one's skills, daytrading is rarely going to pay off, IMHO. You can do it for fun, there are more expensive hobbies probably, but as a means to support yourself in the old age... well, you might get lucky. Or not.
      - bagacrap 4y ago
        if you've been doing it for more than a decade, hopefully that is the advice you will share
    - bombcar 4y ago
      Heh I made 30% trading! Of course had I just let it ride in an index fund I’d’ve made 50+%…
      - nightski 4y ago
        Nah a lot of the tech and meme plays were up hundreds to thousands percent returns. Of course they were hit the hardest in the down turn, but the money making potential was pretty insane.
  - pram 4y ago
    Options trading in particular is really addicting, like gambling. I’ve had periods where I was completely sucked in, looking at charts and news all day. I will admit I’ve had thoughts in the past of “I should just quit my job and do this” without any practical consideration as to how sustainable it would be. Not because I thought I would be rich, just because I wanted to trade all day! It’s kind of like being addicted to an MMO lol
    - moneywoes 4y ago
      What type did you do?
    - spaceman_2020 4y ago
      I did that too and you’re spot on about how addictive it can be. But I looked at my wins and realized that I had no real thesis and was essentially gambling. Had to quit at that point.
    - vineyardmike 4y ago
      +1 I talked with a “professional” day trader who basically said “write down your strategy on a piece of paper pre-market and the. Paper trade that strategy. If it doesn’t match what you were doing then you weren’t acting like a professional, you were a gambler”.
- mumblemumble 4y ago
  To any one person, sure. But, as the saying goes, "None of us is as dumb as all of us." Once you start move into the realm of group decisionmaking based on hypothetical future demand for $OUR_WORLD_CHANGING_PRODUCT, positivity culture starts to take over. Plenty of people in the room where the decision is made may be thinking, "But what if this is a passing fad and people don't really love our product in any sort of durable way," but nobody wants to be the one to actually say it. I would even go so far as to say that those whose temperament would allow them to say something like that out loud in the boardroom generally don't get promoted into the kinds of positions that get you invited to boardroom meetings.
  - wonnage 4y ago
    Positivity culture exists because there’s no real downside for the people exuding it. You swing for the fences and the losses and layoffs are someone else’s problem. Most decent people might find such decision making distasteful and that excludes them from leadership.
    - mumblemumble 4y ago
      It's sort of like optimistic concurrency. Sure, transactions straight-up get killed on a regular basis. But if you make transactions cheap things that are easily replaceable, then the overall system might still benefit. I think that all you really need to do to translate the principle to business culture is replace the word "transaction" with "someone's career".
  - s1artibartfast 4y ago
    It is also because executives operate on the long tail of a pareto distribution. You get there by capitalizing on a large number of successful gambles. With few exceptions, you don't get their without beating the odds several times in a row.
- alecbz 4y ago
  Hindsight's 20/20? Why would we feel sure that people wouldn't keep up with habits they picked up during COVID? That seems like it could have been similarly likely to me -- someone picks up day trading, gets hooked, and now it's a regular habit.
  - thaumasiotes 4y ago
    Well, you'd ask the question "why weren't they doing it before?". If the answer is "they didn't know about it", you might expect them to keep doing it. But not otherwise. Day trading has had a lot of popular awareness for a long time.
    - civilized 4y ago
      Day trading has all the meaning and fulfillment of cigarette smoking and slot machines, but with none of the addictive chemicals or flashing lights. So it's not surprising that people didn't hold onto the habit once there were better alternatives.
    - alecbz 4y ago
      Even if you know something exists, you might just have never tried it for some reason until something causes you to, at which point you might realize you enjoy it. E.g., I got a bike over COVID, found I liked biking a lot, and have been doing it a lot more now.
      - bobthepanda 4y ago
        That's just one data point though, and the issue is whether or not things would stick for the population as a whole. In a related sense, Peleton did really well during the pandemic and now they're doing really poorly.
      - lumost 4y ago
        From a user perspective, day trading is very similar to online poker or other gambling activities. The exception being that everyone wins sometimes, and everyone loses other times. Anecdotally various betting games had a similar growth curve. People rush in when it’s easy, and then rush out once it’s hard.
- eqmvii 4y ago
  Matt Levine called this the "Bored Markets Hypothesis" at the time. Seemed pretty obvious both then and now in hindsight.
bushbaba 4y ago
There prior earnings had substantial revenue from crypto. That’s mostly dried up. Then you’ve got the GME reputation hit. Meanwhile fidelity who avoided crypto and has a great reputation saw & continues to see growth
- aaaaaaaaata 4y ago
  They didn't avoid cryptocurrency..they've been mining. BTC offerings in friendly nations (Canada).
- dcolkitt 4y ago
  What? Fidelity has a huge digital assets division and literally added Bitcoin as a 401(k) option
- deleted 4y ago
  [deleted]
onlyfortoday2 4y ago
t_mann 4y ago
Just saying, the ones who might end up being surprised are those who think that the crazy days of 20/21 are definitely over. For all we know, it's just summer now. Not that I don't dread further lockdowns or even necessarily expect them, but I have them on my list of possible scenarios.
- 14 4y ago
  Oh we will be getting locked down again in the fall I am sure of that. Canada didn’t upgrade it’s definition of fully vaccinated for no reason. Come fall those “fully vaccinated” will be allowed to enter restaurants and work while those who oppose further shots will be told stay home
  - dalyons 4y ago
    I am willing to bet $100, through any escrow mechanism of your choosing, that we are not getting locked down again. There’s no appetite for it, and no reason to do so. Vaccine requirements are not a “lockdown” though by any common understanding of the term.
  - spaceman_2020 4y ago
    Hard to convince people to lockdown when they see their friends and family getting Covid and bouncing back in a week. There was legit fear of the disease in 2020-21. It has now morphed into a strong flu - and the data shows it.
    - tekknik 4y ago
      I wonder if those of us saying the same thing in 2021 will get an apology. Of course I know we won’t.
mgfist 4y ago
All of this has already happened. Just look at the stocks of all the pandemic companies. Peleton, Teledoc, Zoom, Docusign and on and on. Pretty much all down 80%+ from their highs.
- roughly 4y ago
  If anyone had any notion that the markets were efficient or rational in any way regarding the actual underlying value of the companies they purport to represent, I certainly hope that notion didn’t survive the pandemic - I’m not sure what world stocks were pricing in over the last two years, but it didn’t pass even a cursory smell test.
  - adam_arthur 4y ago
    It's rational on the predication of completely absurd stories about growth trajectories. It's what happens when a bunch of dumb money comes into the market
  - throwaway_4ever 4y ago
    It's still going on. Nikola, a vaporware company with absolutely 0 revenues burning $600m / year, is still "worth" $3b. HKD, a vaporware company, is being pump and dumped and is now "worth" $150b+, the size of Bank of America, despite being 50 employees with nothing of value. https://www.reddit.com/r/wallstreetbets/comments/wegalp/hkd_amtd_digital_is_now_the_35th_most_valuable/ https://www.reddit.com/r/wallstreetbets/comments/wegalp/hkd_...
  - ProjectArcturis 4y ago
    The only way I can understand the Efficient Markets Hypothesis is as a way for academic economists to explain why they personally have not gotten rich trading stocks.
    - mikeyouse 4y ago
      If you’re actually curious about the EMH, you should really read something deeper than non-finance people paraphrasing it poorly.
synaesthesisx 4y ago
We’re witnessing a reversion to the mean. A lot of companies are facing a tough reality - especially those with poor cash flow.
woweoe 4y ago
I think people are going to be more tech focused as a result of the pandemic. I notice that the majority of my meetings, even mundane meetings, are virtual rather than face-to-face for example. The big difference that is happening currently is inflation, recession fears, and fear among the general public about financial turmoil. The entire situation has been very poorly handled by governments and institutions around the world who seem to have collectively pretended that nothing was wrong. In particular inflation has been poorly fought because a huge percentage of the left wing were insistent that public spending would not cause inflation, but did not have a chance to implement that public spending in the 2010s due to the rise of the far-right so have absolutely nothing to show for it except inflation. Now the US is trying to cause a recession so that inflation and economy instability can be brought back under some resemblance of control, but the US is still acting as if it's the only major economic power in the world - Asia for example has been far less hit by inflation and many countries (including India) are not predicting a recession.
- slrd7z88 4y ago
spookthesunset 4y ago
Next up, the remote work craze. Everybody thinks they are super productive working from home but on a larger scale I imagine it took a huge hit. Plus it is dystopian as fuck. People need to be around people outside of their immediate family to stay sane and I promise you most of these new remote workers are basically never interacting with people outside their small bubbles. It’s gonna swing back. Calling it now. A ton of people I’m know made some seriously impulsive moves into houses way out in the middle of nowhere thinking this will last. It will be interesting to see how well their bet paid off in a year.
- dehrmann 4y ago
  > A ton of people I’m know made some seriously impulsive moves into houses way out in the middle of nowhere thinking this will last I've seen it too, and I was really surprised because a house is a 5+ year commitment, and it wasn't (and still isn't) clear WFH will be commonplace that far out.
- notfromhere 4y ago
  Not sure why commuting two hours a day into the office to sit at an open office desk is any less dystopian. Not sure why it’s so hard for people to understand that there’s a solid chunk of the population that gained nothing from it.
- 55555 4y ago
  COVID and lockdowns literally gave the majority of people social anxiety. They won’t give their WFH up easily.
  - spookthesunset 4y ago
    Plenty still use Covid as an excuse to avoid returning.
vineyardmike 4y ago
A lot of the numbers I’ve seen are basically a reversal to an existing trend line projected into 2022. Maybe a bit of “rebound” behavior for things that were possible (eg travel). I suspect we’re going to see a regression of most new trends. Especially anything that felt too related to lockdowns.

civilized 4y ago

It should have been obvious to anyone that people would do less day trading once they had anything better to do.

ghaff 4y ago
And once even throwing darts to pick stocks stopped producing big gains. The same thing basically happened in the run-up to dot-bomb. It was really easy to make book with day-trading in 1999 or so. See also crypto.
spaceman_2020 4y ago
Or when making money became harder. Amazing the number of people I personally know who took 1 year of day trading to be the “norm” and made big life decisions based on their results. From quitting good jobs to buying houses they can’t afford, all because they made big money in 2021 and thought they could keep repeating it every year.
- georgeecollins 4y ago
  This happened in 1998-1999 too. People got online trading accounts, did great and then decided to try to invest for a living. You should not take investment advice from people who have been doing it less than a decade. It takes time to sort out the lucky from the smart.
  - mumblemumble 4y ago
    I would even argue that a decade isn't necessarily enough time. The decade in question might have been the 1990s.
    - t_mann 4y ago
      Or the 2010's.
  - smsm42 4y ago
    Unless you're going to do it for living and really invest hard into educating yourself, I don't think you should also take the investment advice from people who have been doing it for more than a decade, unless the advice is "buy index funds and HODL" (I maybe exaggerate a bit, but boiled down to the essence that'd be it). For a common person that doesn't plan to make a career out of it and spend a lot of time honing one's skills, daytrading is rarely going to pay off, IMHO. You can do it for fun, there are more expensive hobbies probably, but as a means to support yourself in the old age... well, you might get lucky. Or not.
    - bagacrap 4y ago
      if you've been doing it for more than a decade, hopefully that is the advice you will share
  - bombcar 4y ago
    Heh I made 30% trading! Of course had I just let it ride in an index fund I’d’ve made 50+%…
    - nightski 4y ago
      Nah a lot of the tech and meme plays were up hundreds to thousands percent returns. Of course they were hit the hardest in the down turn, but the money making potential was pretty insane.
- pram 4y ago
  Options trading in particular is really addicting, like gambling. I’ve had periods where I was completely sucked in, looking at charts and news all day. I will admit I’ve had thoughts in the past of “I should just quit my job and do this” without any practical consideration as to how sustainable it would be. Not because I thought I would be rich, just because I wanted to trade all day! It’s kind of like being addicted to an MMO lol
  - moneywoes 4y ago
    What type did you do?
  - spaceman_2020 4y ago
    I did that too and you’re spot on about how addictive it can be. But I looked at my wins and realized that I had no real thesis and was essentially gambling. Had to quit at that point.
  - vineyardmike 4y ago
    +1 I talked with a “professional” day trader who basically said “write down your strategy on a piece of paper pre-market and the. Paper trade that strategy. If it doesn’t match what you were doing then you weren’t acting like a professional, you were a gambler”.
mumblemumble 4y ago
To any one person, sure. But, as the saying goes, "None of us is as dumb as all of us." Once you start move into the realm of group decisionmaking based on hypothetical future demand for $OUR_WORLD_CHANGING_PRODUCT, positivity culture starts to take over. Plenty of people in the room where the decision is made may be thinking, "But what if this is a passing fad and people don't really love our product in any sort of durable way," but nobody wants to be the one to actually say it. I would even go so far as to say that those whose temperament would allow them to say something like that out loud in the boardroom generally don't get promoted into the kinds of positions that get you invited to boardroom meetings.
- wonnage 4y ago
  Positivity culture exists because there’s no real downside for the people exuding it. You swing for the fences and the losses and layoffs are someone else’s problem. Most decent people might find such decision making distasteful and that excludes them from leadership.
  - mumblemumble 4y ago
    It's sort of like optimistic concurrency. Sure, transactions straight-up get killed on a regular basis. But if you make transactions cheap things that are easily replaceable, then the overall system might still benefit. I think that all you really need to do to translate the principle to business culture is replace the word "transaction" with "someone's career".
- s1artibartfast 4y ago
  It is also because executives operate on the long tail of a pareto distribution. You get there by capitalizing on a large number of successful gambles. With few exceptions, you don't get their without beating the odds several times in a row.
alecbz 4y ago
Hindsight's 20/20? Why would we feel sure that people wouldn't keep up with habits they picked up during COVID? That seems like it could have been similarly likely to me -- someone picks up day trading, gets hooked, and now it's a regular habit.
- thaumasiotes 4y ago
  Well, you'd ask the question "why weren't they doing it before?". If the answer is "they didn't know about it", you might expect them to keep doing it. But not otherwise. Day trading has had a lot of popular awareness for a long time.
  - civilized 4y ago
    Day trading has all the meaning and fulfillment of cigarette smoking and slot machines, but with none of the addictive chemicals or flashing lights. So it's not surprising that people didn't hold onto the habit once there were better alternatives.
  - alecbz 4y ago
    Even if you know something exists, you might just have never tried it for some reason until something causes you to, at which point you might realize you enjoy it. E.g., I got a bike over COVID, found I liked biking a lot, and have been doing it a lot more now.
    - bobthepanda 4y ago
      That's just one data point though, and the issue is whether or not things would stick for the population as a whole. In a related sense, Peleton did really well during the pandemic and now they're doing really poorly.
    - lumost 4y ago
      From a user perspective, day trading is very similar to online poker or other gambling activities. The exception being that everyone wins sometimes, and everyone loses other times. Anecdotally various betting games had a similar growth curve. People rush in when it’s easy, and then rush out once it’s hard.
eqmvii 4y ago
Matt Levine called this the "Bored Markets Hypothesis" at the time. Seemed pretty obvious both then and now in hindsight.

bushbaba 4y ago

There prior earnings had substantial revenue from crypto. That’s mostly dried up. Then you’ve got the GME reputation hit. Meanwhile fidelity who avoided crypto and has a great reputation saw & continues to see growth

aaaaaaaaata 4y ago
They didn't avoid cryptocurrency..they've been mining. BTC offerings in friendly nations (Canada).
dcolkitt 4y ago
What? Fidelity has a huge digital assets division and literally added Bitcoin as a 401(k) option
deleted 4y ago
[deleted]

onlyfortoday2 4y ago

t_mann 4y ago

Just saying, the ones who might end up being surprised are those who think that the crazy days of 20/21 are definitely over. For all we know, it's just summer now. Not that I don't dread further lockdowns or even necessarily expect them, but I have them on my list of possible scenarios.

14 4y ago
Oh we will be getting locked down again in the fall I am sure of that. Canada didn’t upgrade it’s definition of fully vaccinated for no reason. Come fall those “fully vaccinated” will be allowed to enter restaurants and work while those who oppose further shots will be told stay home
- dalyons 4y ago
  I am willing to bet $100, through any escrow mechanism of your choosing, that we are not getting locked down again. There’s no appetite for it, and no reason to do so. Vaccine requirements are not a “lockdown” though by any common understanding of the term.
- spaceman_2020 4y ago
  Hard to convince people to lockdown when they see their friends and family getting Covid and bouncing back in a week. There was legit fear of the disease in 2020-21. It has now morphed into a strong flu - and the data shows it.
  - tekknik 4y ago
    I wonder if those of us saying the same thing in 2021 will get an apology. Of course I know we won’t.

mgfist 4y ago

All of this has already happened. Just look at the stocks of all the pandemic companies. Peleton, Teledoc, Zoom, Docusign and on and on. Pretty much all down 80%+ from their highs.

roughly 4y ago
If anyone had any notion that the markets were efficient or rational in any way regarding the actual underlying value of the companies they purport to represent, I certainly hope that notion didn’t survive the pandemic - I’m not sure what world stocks were pricing in over the last two years, but it didn’t pass even a cursory smell test.
- adam_arthur 4y ago
  It's rational on the predication of completely absurd stories about growth trajectories. It's what happens when a bunch of dumb money comes into the market
- throwaway_4ever 4y ago
  It's still going on. Nikola, a vaporware company with absolutely 0 revenues burning $600m / year, is still "worth" $3b. HKD, a vaporware company, is being pump and dumped and is now "worth" $150b+, the size of Bank of America, despite being 50 employees with nothing of value. https://www.reddit.com/r/wallstreetbets/comments/wegalp/hkd_amtd_digital_is_now_the_35th_most_valuable/ https://www.reddit.com/r/wallstreetbets/comments/wegalp/hkd_...
- ProjectArcturis 4y ago
  The only way I can understand the Efficient Markets Hypothesis is as a way for academic economists to explain why they personally have not gotten rich trading stocks.
  - mikeyouse 4y ago
    If you’re actually curious about the EMH, you should really read something deeper than non-finance people paraphrasing it poorly.

synaesthesisx 4y ago

We’re witnessing a reversion to the mean. A lot of companies are facing a tough reality - especially those with poor cash flow.

woweoe 4y ago

I think people are going to be more tech focused as a result of the pandemic. I notice that the majority of my meetings, even mundane meetings, are virtual rather than face-to-face for example. The big difference that is happening currently is inflation, recession fears, and fear among the general public about financial turmoil. The entire situation has been very poorly handled by governments and institutions around the world who seem to have collectively pretended that nothing was wrong. In particular inflation has been poorly fought because a huge percentage of the left wing were insistent that public spending would not cause inflation, but did not have a chance to implement that public spending in the 2010s due to the rise of the far-right so have absolutely nothing to show for it except inflation. Now the US is trying to cause a recession so that inflation and economy instability can be brought back under some resemblance of control, but the US is still acting as if it's the only major economic power in the world - Asia for example has been far less hit by inflation and many countries (including India) are not predicting a recession.

slrd7z88 4y ago

spookthesunset 4y ago

Next up, the remote work craze. Everybody thinks they are super productive working from home but on a larger scale I imagine it took a huge hit. Plus it is dystopian as fuck. People need to be around people outside of their immediate family to stay sane and I promise you most of these new remote workers are basically never interacting with people outside their small bubbles. It’s gonna swing back. Calling it now. A ton of people I’m know made some seriously impulsive moves into houses way out in the middle of nowhere thinking this will last. It will be interesting to see how well their bet paid off in a year.

dehrmann 4y ago
> A ton of people I’m know made some seriously impulsive moves into houses way out in the middle of nowhere thinking this will last I've seen it too, and I was really surprised because a house is a 5+ year commitment, and it wasn't (and still isn't) clear WFH will be commonplace that far out.
notfromhere 4y ago
Not sure why commuting two hours a day into the office to sit at an open office desk is any less dystopian. Not sure why it’s so hard for people to understand that there’s a solid chunk of the population that gained nothing from it.
55555 4y ago
COVID and lockdowns literally gave the majority of people social anxiety. They won’t give their WFH up easily.
- spookthesunset 4y ago
  Plenty still use Covid as an excuse to avoid returning.

vineyardmike 4y ago

A lot of the numbers I’ve seen are basically a reversal to an existing trend line projected into 2022. Maybe a bit of “rebound” behavior for things that were possible (eg travel). I suspect we’re going to see a regression of most new trends. Especially anything that felt too related to lockdowns.