6 ms·

A lot of Robin Hood's growth in particular was driven by people gambling their stimulus money because they didn't need it to make ends meet, and by the Fed juic

A lot of Robin Hood's growth in particular was driven by people gambling their stimulus money because they didn't need it to make ends meet, and by the Fed juicing the markets with low rates for far too long, and by the ridiculous meme stock phenomenon. It was a perfect storm of stupidity. Personally I'm glad that some sanity is returning to investing, and we are still a long way from getting back to normal.

bastardoperator 4y ago
people gambling their stimulus money because they didn't need it to make ends meet How did you quantify this statement?
- tjr225 4y ago
  They didn't, but I think most people would guess that is accurate. I know I do. I supported one of their open source infrastructure solutions(that they weren't paying for mind you) when SHTF.
  - mepiethree 4y ago
    If all we are doing is guessing, I would also guess that people being stuck at home with nothing to do but mess around with Robinhood played a big factor
    - tjr225 4y ago
      Yeah probably.
    - jeffbee 4y ago
      There is unsurprisingly plenty of survey data about what people did with their stimmies. https://www.nber.org/digest/oct20/most-stimulus-payments-were-saved-or-applied-debt https://www.nber.org/digest/oct20/most-stimulus-payments-wer...
- JohnBooty 4y ago
  In my industry the wave of stimulus definitely caused behavior changes, it was pretty distinct. Obviously, a lot of people did need that money to make ends meet. But it's also obvious that some % of the population was able to treat it as money they were able to play around and have some fun with.
  - WaxProlix 4y ago
    neat, but not a meaningful response to someone asking for hard data.
    - JohnBooty 4y ago
      Something tells me infosec's not going to give me the okay on that one. In lieu of that, I think "sending a wave of money through the system by handing a check to every taxpayer will not temporarily change some peoples' behavior" is the hypothesis that would need some data to back it up, in my view.
      - WaxProlix 4y ago
        If infosec won't give you the +1 on sharing, it's best you and they find some shared ground. I suspect app/othersec would actually agree here. Sending a wave of money into a group of historically underemployed seems like it'd result in normal expenditures, modulo some slush. Maybe it's the contemporaneous injection of many, many trabillions into 501c3s, individual funds, small businesses, and other groups who could show they had done a small amount of due diligence to get a gazillion bazillion dollars for no reason that might draw your interest here? Edit: alternatively, feel free to abstain from conversations where your allegiances lie contrary to complete honesty. I suspect many HNers do this regularly, and you can, too.
        JohnBooty 4y ago
        Your misconceptions about what I said somehow outnumber the things I actually said. Sending a wave of money into a group of historically underemployed seems like it'd result in normal expenditures, modulo some slush. Do you have hard data for that? (j/k) Far more importantly, "sending a wave of money into a group of historically underemployed" is not what happened. Pretty much every taxpayer got a series of stimulus checks. It wasn't based on need; it was based on your claimed income for the previous year. Historically underemployed groups got checks, rich boys with time and money on their hands got checks. Everybody. (edit: not everybody, more like ~80%) Maybe this is the root of your misconceptions? Maybe it's the contemporaneous injection [...] What? That wasn't even remotely part of this discussion. At least not anything I've written. If it helps, I agree with you: a lot of the payments to businesses amounted to lining the pockets of the already-rich. Edit: alternatively, feel free to abstain from conversations where your allegiances lie contrary to complete honesty What? Literally the only thought I've expressed this entire time is yup, that wave of money given to consumers seems like it had an effect on consumer spending habits, and now that stimulus has worked its way through the system some of those habits will revert to their former states. Not the most controversial of opinions. What is this missing honesty you're referring to? This is one of the weirder interactions I've ever had on HN. And that's really saying something.
- bumby 4y ago
  One estimate puts it at $170 billion extra flowing into retail investing.[1] Also, it may be reasonable to use the savings rate as a rough proxy. That rate was higher than it has been for decades when the stimulus was active and has since dropped. [2] [1] https://www.nytimes.com/2021/03/21/business/stimulus-check-stock-market.html https://www.nytimes.com/2021/03/21/business/stimulus-check-s... [2] https://fred.stlouisfed.org/series/PSAVERT https://fred.stlouisfed.org/series/PSAVERT
  - eek2121 4y ago
    I am willing to bet they didn't factor in the whole meme stock craze. Zero of our stimulus went into buying said stocks, however I did make a bucket load from GME and AMC prior. Our stimulus went into further "stimulating" our savings account. The money I spent with Robinhood was entertainment money. It just happened to pay off big. A more conservative estimate places stimulus "meme stock" trading at less than 0.1% of the stimulus.
    - bastardoperator 4y ago
      I made a bucket load in 2020 and 2021 and didn't qualify for a stimulus check based on income. How are we defining bucket load?
  - sershe 4y ago
    How much of that was due to inflation? People could just be trying to get rid of cash. I had a bunch of excess cash due to falling behind on D.C.A.-ing, and I accelerated that (which was not a good idea in the short term, but that's what D.C.A.-ing is all about - wish I hadn't fallen behind on it over the years!) and bought a bunch of under-par bonds and utilities for the yield, sold a lot of now-expired SPY puts and stock calls too ;) More trading than I've done in my life, mostly because of inflation, not stimulus.
    - bumby 4y ago
      It’s possible, but I don’t think that was a major factor. It wasn’t in the linked article and inflation was much lower during the stimulus. When it was creeping up, initially people thought it was transient. I don’t think most people know what the inflation rate actually is; I asked someone yesterday and they said “close to 50%”.
Cyph0n 4y ago
More like gambling fraudulent PPP loans.
nemo44x 4y ago
The hardest part of this to me to deal with is that it’s the truth. For decades, the conservative line was if you give people money they’ll just blow it on gambling and booze. Turns out it’s true.
- birksherty 4y ago
  Many people need that money. It's absurd Americans judging at normal people spending money, but same people ok with companies making record profit during pandemic, the minimum wage limit etc. It's pathetic.
  - ok_dad 4y ago
    No kidding, a few well off tech bros use the stimulus to gamble and suddenly every family who actually needed that money was a waste? Was the government just supposed to lower taxes for corporations and the rich yet again?!
    - 8ytecoder 4y ago
      It's the usual way people react to their favorite partition talking points. There's a good amount of research that suggests that people saved their stimulus money. Not everyone spent and not everyone gambled it. https://jsri.msu.edu/publications/nexo/vol-xxv/no-1-fall-2021/impact-of-the-coronavirus-stimulus-checks-on-the-economy https://jsri.msu.edu/publications/nexo/vol-xxv/no-1-fall-202...
    - MandieD 4y ago
      It would have been even better had the Paycheck Protection Program worked more like Kurzarbeit does in Germany - instead of just giving money to employers on the promise that they'd use it to protect jobs, insist that the employers use it to pay the wages that employees were going to be missing due to reduced hours, and have to prove that that's where the money went. Kurzarbeit was one of the main reasons my employer survived the ill-timed purchase of another German industrial giant (deal done right before the 2008-9 financial crisis kicked off, payment due during said financial crisis) without having to lay people off, and left it in the position to get right back into the game once the world economy started improving. And, of course, spared thousands of working people a lot of misery.
rubicon33 4y ago
lmfao people gambled what, $1k? $2k? sheesh...
alx__ 4y ago
This reads like a boring classist commentor. Reddit is always joking/lying about what they are really doing. So no, stimulus checks didn't cause retail investors to become less sane. People stuck at home, with extra spending money, and a desire for internet points, caused your deviation from normality in investing.
humaniania 4y ago
What evidence do you have to support those claims about causes?

bastardoperator 4y ago

people gambling their stimulus money because they didn't need it to make ends meet How did you quantify this statement?

tjr225 4y ago
They didn't, but I think most people would guess that is accurate. I know I do. I supported one of their open source infrastructure solutions(that they weren't paying for mind you) when SHTF.
- mepiethree 4y ago
  If all we are doing is guessing, I would also guess that people being stuck at home with nothing to do but mess around with Robinhood played a big factor
  - tjr225 4y ago
    Yeah probably.
  - jeffbee 4y ago
    There is unsurprisingly plenty of survey data about what people did with their stimmies. https://www.nber.org/digest/oct20/most-stimulus-payments-were-saved-or-applied-debt https://www.nber.org/digest/oct20/most-stimulus-payments-wer...
JohnBooty 4y ago
In my industry the wave of stimulus definitely caused behavior changes, it was pretty distinct. Obviously, a lot of people did need that money to make ends meet. But it's also obvious that some % of the population was able to treat it as money they were able to play around and have some fun with.
- WaxProlix 4y ago
  neat, but not a meaningful response to someone asking for hard data.
  - JohnBooty 4y ago
    Something tells me infosec's not going to give me the okay on that one. In lieu of that, I think "sending a wave of money through the system by handing a check to every taxpayer will not temporarily change some peoples' behavior" is the hypothesis that would need some data to back it up, in my view.
    - WaxProlix 4y ago
      If infosec won't give you the +1 on sharing, it's best you and they find some shared ground. I suspect app/othersec would actually agree here. Sending a wave of money into a group of historically underemployed seems like it'd result in normal expenditures, modulo some slush. Maybe it's the contemporaneous injection of many, many trabillions into 501c3s, individual funds, small businesses, and other groups who could show they had done a small amount of due diligence to get a gazillion bazillion dollars for no reason that might draw your interest here? Edit: alternatively, feel free to abstain from conversations where your allegiances lie contrary to complete honesty. I suspect many HNers do this regularly, and you can, too.
      - JohnBooty 4y ago
        Your misconceptions about what I said somehow outnumber the things I actually said. Sending a wave of money into a group of historically underemployed seems like it'd result in normal expenditures, modulo some slush. Do you have hard data for that? (j/k) Far more importantly, "sending a wave of money into a group of historically underemployed" is not what happened. Pretty much every taxpayer got a series of stimulus checks. It wasn't based on need; it was based on your claimed income for the previous year. Historically underemployed groups got checks, rich boys with time and money on their hands got checks. Everybody. (edit: not everybody, more like ~80%) Maybe this is the root of your misconceptions? Maybe it's the contemporaneous injection [...] What? That wasn't even remotely part of this discussion. At least not anything I've written. If it helps, I agree with you: a lot of the payments to businesses amounted to lining the pockets of the already-rich. Edit: alternatively, feel free to abstain from conversations where your allegiances lie contrary to complete honesty What? Literally the only thought I've expressed this entire time is yup, that wave of money given to consumers seems like it had an effect on consumer spending habits, and now that stimulus has worked its way through the system some of those habits will revert to their former states. Not the most controversial of opinions. What is this missing honesty you're referring to? This is one of the weirder interactions I've ever had on HN. And that's really saying something.
bumby 4y ago
One estimate puts it at $170 billion extra flowing into retail investing.[1] Also, it may be reasonable to use the savings rate as a rough proxy. That rate was higher than it has been for decades when the stimulus was active and has since dropped. [2] [1] https://www.nytimes.com/2021/03/21/business/stimulus-check-stock-market.html https://www.nytimes.com/2021/03/21/business/stimulus-check-s... [2] https://fred.stlouisfed.org/series/PSAVERT https://fred.stlouisfed.org/series/PSAVERT
- eek2121 4y ago
  I am willing to bet they didn't factor in the whole meme stock craze. Zero of our stimulus went into buying said stocks, however I did make a bucket load from GME and AMC prior. Our stimulus went into further "stimulating" our savings account. The money I spent with Robinhood was entertainment money. It just happened to pay off big. A more conservative estimate places stimulus "meme stock" trading at less than 0.1% of the stimulus.
  - bastardoperator 4y ago
    I made a bucket load in 2020 and 2021 and didn't qualify for a stimulus check based on income. How are we defining bucket load?
- sershe 4y ago
  How much of that was due to inflation? People could just be trying to get rid of cash. I had a bunch of excess cash due to falling behind on D.C.A.-ing, and I accelerated that (which was not a good idea in the short term, but that's what D.C.A.-ing is all about - wish I hadn't fallen behind on it over the years!) and bought a bunch of under-par bonds and utilities for the yield, sold a lot of now-expired SPY puts and stock calls too ;) More trading than I've done in my life, mostly because of inflation, not stimulus.
  - bumby 4y ago
    It’s possible, but I don’t think that was a major factor. It wasn’t in the linked article and inflation was much lower during the stimulus. When it was creeping up, initially people thought it was transient. I don’t think most people know what the inflation rate actually is; I asked someone yesterday and they said “close to 50%”.

Cyph0n 4y ago

More like gambling fraudulent PPP loans.

nemo44x 4y ago

The hardest part of this to me to deal with is that it’s the truth. For decades, the conservative line was if you give people money they’ll just blow it on gambling and booze. Turns out it’s true.

birksherty 4y ago
Many people need that money. It's absurd Americans judging at normal people spending money, but same people ok with companies making record profit during pandemic, the minimum wage limit etc. It's pathetic.
- ok_dad 4y ago
  No kidding, a few well off tech bros use the stimulus to gamble and suddenly every family who actually needed that money was a waste? Was the government just supposed to lower taxes for corporations and the rich yet again?!
  - 8ytecoder 4y ago
    It's the usual way people react to their favorite partition talking points. There's a good amount of research that suggests that people saved their stimulus money. Not everyone spent and not everyone gambled it. https://jsri.msu.edu/publications/nexo/vol-xxv/no-1-fall-2021/impact-of-the-coronavirus-stimulus-checks-on-the-economy https://jsri.msu.edu/publications/nexo/vol-xxv/no-1-fall-202...
  - MandieD 4y ago
    It would have been even better had the Paycheck Protection Program worked more like Kurzarbeit does in Germany - instead of just giving money to employers on the promise that they'd use it to protect jobs, insist that the employers use it to pay the wages that employees were going to be missing due to reduced hours, and have to prove that that's where the money went. Kurzarbeit was one of the main reasons my employer survived the ill-timed purchase of another German industrial giant (deal done right before the 2008-9 financial crisis kicked off, payment due during said financial crisis) without having to lay people off, and left it in the position to get right back into the game once the world economy started improving. And, of course, spared thousands of working people a lot of misery.

rubicon33 4y ago

lmfao people gambled what, $1k? $2k? sheesh...

alx__ 4y ago

This reads like a boring classist commentor. Reddit is always joking/lying about what they are really doing. So no, stimulus checks didn't cause retail investors to become less sane. People stuck at home, with extra spending money, and a desire for internet points, caused your deviation from normality in investing.

humaniania 4y ago

What evidence do you have to support those claims about causes?