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(Forbes)   Wanna be a millionaire? Offer commission-free trading to millennials, have a multibillion-dollar IPO, then rob from yourself by waiting a few months and becoming one of the poor   (forbes.com) divider line
    More: Awkward, Stock market, Robinhood cofounders Vlad Tenev, shares of their popular stock, blockbuster start, Forbes' calculations, Initial public offering, Stock exchange, Stock  
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1390 clicks; posted to Business » on 21 Jan 2022 at 8:55 AM (16 weeks ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook



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View Voting Results: Smartest and Funniest
 
2022-01-21 7:50:21 AM  
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2022-01-21 9:05:50 AM  
Just a couple of techbros chilling.  You can trust them.  Not those corporate types.
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2022-01-21 9:17:59 AM  
It's true what they say - if you want to make a million dollars, start with a billion.
 
2022-01-21 9:24:35 AM  
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No longer billionaires?! So they're out of the three commas club?
 
2022-01-21 9:25:18 AM  
"Based on Robinhood's closing stock price of $13.89 per share on Wednesday, Tenev and Bhatt now have net worths of $845 million and $911 million, respectively, from a peak of $4.3 billion and $4.9 billion in August 2021."

Well, boo hoo. Now that they are no longer "on-paper" billionaires, only "on-paper" millionaires, Forbes will no longer acknowledge their existence.
 
2022-01-21 9:55:34 AM  
Uh, moronmitter, it was designed to be free so that ANYONE could trade.  So it was designed as a very barebones free app.

The reason it's failing is because virtually everyone does that now so people have been migrating to other more established apps.

/That and the fact that reddit is butthurt that they turned off trading gamespot that one day to prevent the blatantly illegal price-manipulation.
 
2022-01-21 10:00:12 AM  

jake3988: Uh, moronmitter, it was designed to be free so that ANYONE could trade.


Robinhood wasn't created so that anyone could trade.  Anyone could already trade for $6 a trade.  Anyone should not be trading enough to where fees matter.  Anyone should be making as few trades as possible.

Robinhood was created to gamify trading so that anyone would trade constantly thereby allowing Robinhood to maximize payment for order flow revenue.

Robinhood traders are not Robinhood's customers.  They are Robinhood's product.
 
2022-01-21 10:03:23 AM  

Rapmaster2000: Just a couple of techbros chilling.  You can trust them.  Not those corporate types.
[Fark user image image 850x478]


I trust any duo from the Miami Vice reboot promotional.
 
2022-01-21 10:17:57 AM  
I'm fixing to rob this casino by winning millions on these machines.  These guys on the internet told me I could do it.  "We're ALL investors in this casino" they told me.  I was like, Fark yeah!  and I brought all my credit cards with me.
 
2022-01-21 10:28:46 AM  

Hawk the Hawk: Rapmaster2000: Just a couple of techbros chilling.  You can trust them.  Not those corporate types.
[Fark user image image 850x478]

I trust any duo from the Miami Vice reboot promotional.


Damn. They do kinda look alike.

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2022-01-21 10:34:11 AM  

Hawk the Hawk: Rapmaster2000: Just a couple of techbros chilling.  You can trust them.  Not those corporate types.
[Fark user image image 850x478]

I trust any duo from the Miami Vice reboot promotional.


Not so much Crockett and Tubbs as Shyster and Bent.
 
2022-01-21 10:38:41 AM  

jake3988: Uh, moronmitter, it was designed to be free so that ANYONE could trade.  So it was designed as a very barebones free app.

The reason it's failing is because virtually everyone does that now so people have been migrating to other more established apps.

/That and the fact that reddit is butthurt that they turned off trading gamespot that one day to prevent the blatantly illegal price-manipulation.


Wow you don't know nuttin' about nuttin' but you go on having those opinions. You're awesome.
 
2022-01-21 10:49:59 AM  

jake3988: Uh, moronmitter, it was designed to be free so that ANYONE could trade.  So it was designed as a very barebones free app.

The reason it's failing is because virtually everyone does that now so people have been migrating to other more established apps.

/That and the fact that reddit is butthurt that they turned off trading gamespot that one day to prevent the blatantly illegal price-manipulation.


wow.. thats.. amazingly wrong.. I mean impressively wrong..
 
2022-01-21 11:36:53 AM  

Rapmaster2000: jake3988: Uh, moronmitter, it was designed to be free so that ANYONE could trade.

Robinhood wasn't created so that anyone could trade.  Anyone could already trade for $6 a trade.  Anyone should not be trading enough to where fees matter.  Anyone should be making as few trades as possible.

Robinhood was created to gamify trading so that anyone would trade constantly thereby allowing Robinhood to maximize payment for order flow revenue.

Robinhood traders are not Robinhood's customers.  They are Robinhood's product.


If you don't have a lot of money, the 6$ trades eat away at your returns. And if you want to make more money, trades have to happen or your losing more in opportunity cost or staying in a position that over time has more risk that you may have thought at first.
I don't have much of a comment about these guys, but I would have killed to be part of the market when I had way less. I could not have been in anything long as cash came and went, but the market was so dang hot it would have been nice to participate. My situation (tech contractor with gaps between jobs) may be rare, but their app had a market. As a long term thinker when it comes to money I kinda like they didn't dump and are in it for longer than the IPO.
 
2022-01-21 11:53:52 AM  

Bannanaslug: Rapmaster2000: jake3988: Uh, moronmitter, it was designed to be free so that ANYONE could trade.

Robinhood wasn't created so that anyone could trade.  Anyone could already trade for $6 a trade.  Anyone should not be trading enough to where fees matter.  Anyone should be making as few trades as possible.

Robinhood was created to gamify trading so that anyone would trade constantly thereby allowing Robinhood to maximize payment for order flow revenue.

Robinhood traders are not Robinhood's customers.  They are Robinhood's product.

If you don't have a lot of money, the 6$ trades eat away at your returns. And if you want to make more money, trades have to happen or your losing more in opportunity cost or staying in a position that over time has more risk that you may have thought at first.


Fidelity analyzed returns among their account holders and they found that the most successful traders over the long term were dead.  Meaning, that the less they traded the more successful they were.  Don't trade. Invest.  Buy quality stocks and hold for a decade.

The average investor earns terrible returns because they trade too much and it's not the fees that are killing them.

If you want to succeed in investing, trade less. https://www.thebalance.com/why-average-investors-earn-below-average-market-returns-2388519
 
2022-01-21 11:58:41 AM  
I do believe some of our issues step from this very irrational way of "seeing" the world. Or it's just a straight up lie knowingly used to manipulate your simpleton mind.

'Cofounders Are No Longer Billionaires, Shares Down 60% Since IPO"


Let's be real honest about reality here.
If you do not have the billion, in actually spendable liquid cash. Then you are not really a billionaire.

If you are holding a billion dollars worth of stock, and sell it and have a billion dollars, now you are a billionaire.
But technically speaking in actual reality, while you hold the stock, you are only a potential billionaire.
Your state of existence, retaliative to the billions of dollars, is only speculative, relative to the current value of the stock.
But it is only upon converting the stock into actual cash, that you are no longer in the situaiot of potential.
Until it is cash, the status of being a billionaire is only potential.
Like in quantum mechanics, until we observe the sale of the stock, the price of that sale is not yet known.
So the potential to be a billionaire is there, but not yet fulfilled, until the moment of sale, in which we observe the true value of the stock, in reference to your own money status.


owning a  $100,000, does not give you all the same options and cost as having $100,000 in actual cash to spend.

So if i own a collection of cars, that is claimed to be valued at a billion dollars. but i have an income of $30k and only $400 in actual spendable cash to my name.

Am i billionaire?


And now mechanically understand that there is no difference between the claimed value of the cars or the stock. In reference to my status as a billionaire.
 
2022-01-21 12:00:33 PM  
CORRECTION FOR MISSING WORD:

owning a  $100,000 car, does not give you all the same options and cost as having $100,000 in actual cash to spend.
 
2022-01-21 12:04:41 PM  
Haha.

Opened a RH account, made a few hundred bucks on Doge when I saw Evil Spaceboy tweet about it and knew his army would pounce. Gave some to a friend, put the rest in my Vanguard account. Closed RH account.

shiatty app run shiattily.
 
2022-01-21 12:40:28 PM  

Rapmaster2000: jake3988: Uh, moronmitter, it was designed to be free so that ANYONE could trade.

Robinhood wasn't created so that anyone could trade.  Anyone could already trade for $6 a trade.  Anyone should not be trading enough to where fees matter.  Anyone should be making as few trades as possible.

Robinhood was created to gamify trading so that anyone would trade constantly thereby allowing Robinhood to maximize payment for order flow revenue.

Robinhood traders are not Robinhood's customers.  They are Robinhood's product.


I'm not even gonna bother responding to your 2nd and 3rd sentences, I'm gonna guess they were copy+pasted from a reddit thread somewhere and you don't actually have any idea what you're talking about, you're just regurgitating a stupid talking point.

For the 1st, it doesn't have anything to do with volume of trades, it has to do with the percentage of the fee related to what you're trading.

For example, I got into a broker (no longer exists) that was 4.99 a trade, the cheapest of all the big names I could find.

Even with that, If I place a $100 trade, that's a FIVE PERCENT fee.  But if I traded $1000 minimum (which is what I did, and still do, for convenience sake), that works out to a half percent fee.  That really hinders a normal person from trading. And that was for the cheapest place around!

With no fee trading, you can put in any size trade you want thereby allowing the common man to trade.  That was 100% the point of robinhood when it created.

/Technically, yes, you could always have gone around brokers and do direct trade but only certain companies offer that and it's a MAJOR pain.
 
2022-01-21 1:08:18 PM  

PvtStash: Let's be real honest about reality here.
If you do not have the billion, in actually spendable liquid cash. Then you are not really a billionaire.


Unless you're about to buy straight up buy something worth a billion dollars free and clear, it doesn't matter.  Your net worth is collateral to fund your purchasing ability based on who will lend you money.

Which would you rather do: 1) Sell $1B of stock, pay capital gains of 20% or $200M and then have $800M free and clear; or: 2) Hold your $1B of stock, receive a loan based on your stock worth of $800M (80% LTV) and pay an annual interest rate of 5% to the lender?  It depends on what you're doing with the $800M and how long you intend to keep that bank note.

This is oversimplified but is basically how mega-millionaires and billionaires finance their lifestyles and defer capital gains taxes.
 
2022-01-21 1:21:32 PM  

jake3988: I'm not even gonna bother responding to your 2nd and 3rd sentences, I'm gonna guess they were copy+pasted from a reddit thread


If Reddit got it from anywhere, they got it from the standard financial media who understands exactly how Robinhood makes their money.  What surprises me more is that is not a known thing.  That people think Robinhood is some valiant fighter for economic equality and not a menace that helps its "users" (re: product) as well as Facebook.

The first question you should ask yourself is "how does Robinhood make money" because if the trades and the platform are free to use, like Youtube and Facebook, then what actually is the revenue generating product?

Let's ask Investopedia:

Transaction-based revenues
Robinhood generates transaction-based revenues by routing its users' orders for options, equities, and cryptocurrencies to market makers, which is a process known as payment for order flow (PFOF).9 Brokerage firms that use PFOF receive a small payment as compensation for directing orders to a particular market maker. The payment is usually only fractions of a penny per share but can be a significant source of revenue for companies dealing with a large number of orders. PFOF is a major reason Robinhood is able to offer zero-commission trading. Robinhood's transaction-based revenue rose 339.6% to $420.4 million in Q1 FY 2021, accounting for more than 80% of companywide revenue.10


Or how about the government (SEC) and private industry regulator (FINRA) who fined them for not disclosing to their users how they make money.  I enjoy Scott Galloway because he's all over the Menace Economy of which Facebook, Uber, and Robinhood are a part:  https://www.profgalloway.com/robinhood-and-iaddiction/

On Wednesday, trading app Robinhood agreed to pay $70 million in fines and customer reimbursements to settle a FINRA investigation. That followed a $60 million fine in December to the SEC for failing to properly disclose its order-flow revenue, and a separate $1.25 million fine to FINRA. These are record fines ... that amount to less than 0.5% of the firm's valuation. On Thursday, the firm responded to regulatory bodies deeming them "reckless" by filing an S-1, initiating the IPO process. In sum, these aren't fines but a validation of the company's business model and evidence that, each day, there is (another) insurrection in D.C. However, this mob drives Teslas and is on Clubhouse.

But why is Robinhood a menace you may ask?  Because they're turning investing into a fun game and not the sober and boring practice it needs to be if you are to be successful at it.

https://www.profgalloway.com/2021-predictions-person-of-the-year/
Why would they do that? At Robinhood, users aren't customers, they're products. More specifically, their trades are the product, which Robinhood sells to market makers. The more their users trade, the more money Robinhood makes. And Robinhood users make a lot of trades - 9 times more trades than E-Trade users, 40 times more than Schwab users (88 times more options trades) relative to account size - a rate that makes no sense for the young, non-wealthy, and inexperienced traders flocking to the platform.

This is an entirely bad idea which Robinhood actively promotes its users into doing.
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2022-01-21 3:33:34 PM  

Rapmaster2000: Bannanaslug: Rapmaster2000: jake3988: Uh, moronmitter, it was designed to be free so that ANYONE could trade.

Robinhood wasn't created so that anyone could trade.  Anyone could already trade for $6 a trade.  Anyone should not be trading enough to where fees matter.  Anyone should be making as few trades as possible.

Robinhood was created to gamify trading so that anyone would trade constantly thereby allowing Robinhood to maximize payment for order flow revenue.

Robinhood traders are not Robinhood's customers.  They are Robinhood's product.

If you don't have a lot of money, the 6$ trades eat away at your returns. And if you want to make more money, trades have to happen or your losing more in opportunity cost or staying in a position that over time has more risk that you may have thought at first.

Fidelity analyzed returns among their account holders and they found that the most successful traders over the long term were dead.  Meaning, that the less they traded the more successful they were.  Don't trade. Invest.  Buy quality stocks and hold for a decade.

The average investor earns terrible returns because they trade too much and it's not the fees that are killing them.

If you want to succeed in investing, trade less. https://www.thebalance.com/why-average-investors-earn-below-average-market-returns-2388519


In that period the market went straight up, especially in tech where a lot of younger people think to put their money and are a large part of RH's users. Just because some people don't get the same gains that does not mean others can find a lot of value in a 0$ trade platform. Finding what "average" people do that I can do better is how I got ahead in life, not a reason to avoid something hard to learn. I for example was able to at least bump up my home deposit for the few months between getting debt free and buying a home, so I knew I had less than a year to trade. Which is super risky and I would not advise to...well anybody. It was a risk I was willing to take but I am an extreme example of an econ nerd that had been hovering over the market for years before that, and right after the COVID dip early 2020. I also traded some options at the time and even though I made money pretty much recommend those to no one as it is crazy risky, and if you are as a very small % of your cash considering some bad news for a company, the economy, or the world can 0 your investment overnight with not a damn thing you can do about it.
Not to say your method is incorrect, if it is better for the average persons return than go for it, at the very least as part of your portfolio. And a lot of it depends on the time you want to invest on research, risk, age, etc.
 
2022-01-21 3:46:34 PM  

Bannanaslug: Finding what "average" people do that I can do better is how I got ahead in life, not a reason to avoid something hard to learn.


6% of professional investors beat the market over 20 years.  Congrats on being elite.
 
2022-01-21 3:50:32 PM  

valkore: PvtStash: Let's be real honest about reality here.
If you do not have the billion, in actually spendable liquid cash. Then you are not really a billionaire.

Unless you're about to buy straight up buy something worth a billion dollars free and clear, it doesn't matter.  Your net worth is collateral to fund your purchasing ability based on who will lend you money.

Which would you rather do: 1) Sell $1B of stock, pay capital gains of 20% or $200M and then have $800M free and clear; or: 2) Hold your $1B of stock, receive a loan based on your stock worth of $800M (80% LTV) and pay an annual interest rate of 5% to the lender?  It depends on what you're doing with the $800M and how long you intend to keep that bank note.

This is oversimplified but is basically how mega-millionaires and billionaires finance their lifestyles and defer capital gains taxes.


i do understand these thigns.
What i am trying to describe is that it is the illusion of that being real liquid self owned cash that fooks up a lot of other people's underwater of reality.

I happen to have it on good authority that
"the words we use are strong, they make reality."


And so it is when we refer to someone as 'a billionaire" the typical middle bell simpleton sees this as, liquid cash n hand, literally can count it and find, i am in fact holding a billion, not in potential value, but actual cash value.It is that the "billionaire" is not really risking and spending their own billions. they are spending someone or many someone's collected billions.And they get that to spend, due to their potential/speculated value.The actual reality of it is far enough removed from how it is described in wording. i do believe this fooks with people and their ability to get a grasp on actual reality goign on around them.like this: translate the actual billionaire to the not billionaire being asked to put money into X fly by night scam to earn more money  later.If those yahoos were really understanding the behavior and actually billionaires they try to emulate.they would never hand those cons their own monye, they'd be giving them someone else's money/get that v/c money.Because if the biz venture goes bust or not, i still got my million dolor payday for it as a starter of it wiht the C entitled to money O status of that biz venture for as long as it did last.you know the saying about bad sex/pizza right?same thing here.bad business venture, on your dime, that went belly up after five years? Whatever still got my extra fat paychcek for those five years. k thnkx bye.
 
2022-01-21 4:27:24 PM  

Rapmaster2000: Bannanaslug: Finding what "average" people do that I can do better is how I got ahead in life, not a reason to avoid something hard to learn.

6% of professional investors beat the market over 20 years.  Congrats on being elite.


Find something you are good at and make money, that's not elite, it's life.
And that number is probably returns for the investor as fees and trade costs add up, especially earlier costs that would have appreciated over the 20 years. Professionals get a paycheck and that adds up for the one paying. Part of the reason set it and forget it works well for investing without commissions.
Also I was in the market for less than a year at a time it went up a lot, so I may not have beat the market. I did this week picking up Take 2 when short term investors pulled out because the spending (Good for you Zynga investors, that was pricey) and sold soon after it bounced back when long term investors came in because long term that was probably a good move for the company. It was 500 bucks in and 560ish out. At 7$ each trade that would have been a big chunk for a small short term position.
 
2022-01-21 5:15:52 PM  

der Sittenstrolch: [Fark user image image 400x225]No longer billionaires?! So they're out of the three commas club?


Fark user imageView Full Size
 
2022-01-21 6:31:47 PM  

Rapmaster2000: But why is Robinhood a menace you may ask? Because they're turning investing into a fun game and not the sober and boring practice it needs to be if you are to be successful at it.
https://www.profgalloway.com/2021-predictions-person-of-the-year/
Why would they do that? At Robinhood, users aren't customers, they're products. More specifically, their trades are the product, which Robinhood sells to market makers. The more their users trade, the more money Robinhood makes. And Robinhood users make a lot of trades - 9 times more trades than E-Trade users, 40 times more than Schwab users (88 times more options trades) relative to account size - a rate that makes no sense for the young, non-wealthy, and inexperienced traders flocking to the platform.
This is an entirely bad idea which Robinhood actively promotes its users into doing.


I wish I could remember this interview I heard, I think it was with the girlfriend of one of the guys who started RobinHood.  She was saying that her man was in "finance" and then when everybody groaned, she said, No, he's a good capitalist.  He's leveling the playing field for everyone, now everyone can get in on these markets, blah blah.
But she was a believer.  She was sincere.  Of course she's probably rich now, so she can afford to be generous.

I was thinking, Ok, first of all there's no "good capitalist" since part of their job description is finding ways to profit above all.  And  if he was  a good guy, then why is he getting filthy rich, and a lot of people who invested in his company lost a lot of money through stupidity?  I'm sure he knew that's how the game was played before he started, and he intended to make a lot of money--by taking it from stupid people.  He's in farking finance.
I don't know how people can lie to themselves about things like this, but it's like a cornerstone of our society.
 
2022-01-21 9:59:37 PM  

Bannanaslug: Also I was in the market for less than a year at a time it went up a lot, so I may not have beat the market. I did this week picking up Take 2 when short term investors pulled out because the spending (Good for you Zynga investors, that was pricey) and sold soon after it bounced back when long term investors came in because long term that was probably a good move for the company. It was 500 bucks in and 560ish out. At 7$ each trade that would have been a big chunk for a small short term position.


You suggest you're an uncannily skilled investor - an extreme econ nerd with years of market study - but you're not even sure if you did better or worse than market average over a year?

I totally sympathize, I know I've sounded a lot like that. And the marketing from trading firms is pushing hard to make you and everyone else think that way. Give it a close look some time. It sounds like you're still working with relatively small stakes, so you won't even have to reckon with a large gap if you find that your results were not so much better. But think about the amount of risk you took on - you'd have to have outperformed by a wide margin to justify that. Think about the work, the attention and stress.

It can be so much easier. Buy when you can plan to hold it for decades. Nerd through the implications of RobinHood selling your orders - that has an effective if hidden cost to you too.
 
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