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Comment by paulpauper | Hacker News Reader

I want robinhood to succeed. Retail brokers charge huge fees for poor order execution, and also charge fees for arbitrary stuff. $7-10/trade adds up fast and also huge fees for options.

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If you’re trading that much you’re almost certainly already losing. High fees are probably good for you.

I want Robinhood to fail. Most retail brokers pass through price improvements to their customers, and their fee structure is reasonable for the services they provide. I don't want a Facebook Of Financial Services (you don't pay directly, you pay through being the product).

Robinhood is what Moviepass rebranded as a hip fintech startup that provides trading services would look like. They target the financially illiterate, and should be nuked from orbit.

If a few dollars per trade are breaking you, you have no business actively trading (and should have at least $25k in working capital per FINRA pattern day trading guidelines [1]). Put your money in an index fund at Vanguard and stop gambling in what is a glorified loot box at Robinhood user scale.

[1] http://www.finra.org/investors/day-trading-margin-requiremen...

Search for 'payment for order flow' if you want to know how robinhood gets paid and why you might want to pay trading fees instead of getting it for 'free'.

And most people should realize that all discount brokers are this way and Robinhood is not special in this regard.

Virtually all brokerages do that, including the ones which make you pay all the traditional trading fees.

What you'll be getting is no fees and even worse execution quality. Choose your poison.

There's been fee wars going on with brokerage accounts lately, so fees are down to under $5. Some brokerages offer X amount of free trades if you have $Y in funds deposited too and free trades on certain low cost index ETFs.

>> Retail brokers charge huge fees

What? $5-$10 for a stock purchase? If you are purchasing such a small amount that the fee is > 0.1 % you should not be trading stocks. (In general you shouldn't.)

So only trade stocks in increments of at least $5,000? That precludes, for example, dollar cost averaging.

If you are investing like that are you really sure you are outperforming the strategy of just buying and holding of an ETF?

If you are a very sophisticated investor (and I bet some people on this forum are) maybe that works. But in general people who trade stocks for themselves at home take a bath.

Buying and holding ETFs is not incompatible with dollar cost averaging.

So poor people need not apply to the stock market? I just love the amount of class separation that is considered a normal and moral standard of most of the HN crowd.

A poor person could still benefit from the stock market by investing in a fund over the long term. That is, if they had money to spare, which they probably don't--the definition of poor is that you don't have money to spare. It's not like free trades is some magical gateway out of poverty--in fact, it's more likely a way to lose money.

The solution to poor people not having enough money to invest is to get them more money.

I agree with you that poor people should have more wealth to invest. Meanwhile, a low net worth person can still benefit from the market by holding a bond, an ETF or a mutual fund. There are many commission free or nearly commission free ways to do this. Trading stocks is not on that list.

Poor people normally invest in things like lottery tickets, which are 100% loss. I think a real investment of any kind is better than that.

>So poor people need not apply to the stock market?

A single stock of Amazon costs just over $1500. That is more than the monthly rent a poor person pays. If they want Amazon in their portfolio, they can pick a mutual fund that includes it, and they wouldn't have to shell out anywhere near $1500.

As an aside, I find the argument that "this will help the poor" really disingenuous when you consider that the poor are the first ones blamed when things go awry. Remember 2008, when the crisis happened because "the poor were given houses they couldn't afford?"

Companies like Robinhood are not looking after the poor.

Low net-worth individuals should not trade stocks. They should own iBonds or market tracking ETFs. That's not snobbery, that's what any good investment advisor would tell you.

I agree with you! I just get a little bothered by some of the attitudes. I'm sorry if I've come off negative.

Only for small accounts. For large accounts with large transactions that fee is the least of your worries. Spread, execution quality, speed of transfers, margin and deposit rates, reliability/availability and yes, events like this or even the possibility of robinbros "breaking" some feature you rely on, would be. Don't be myopic.

I hope RH grows with its customers, otherwise it'll eventually be outgrown by them. One of the most obvious and biggest disruptions that still hasn't happened is to let you set a custom portfolio on autopilot. At the end of the day that's what anyone should want.

>>to let you set a custom portfolio on autopilot

Can't you invest in a set of 5 passive ETFs and forget about it for 40 years? Or even build your own ETFs for that purpose: https://www.motif.com? Or are you talking about "if risk of market crash is too high, sell everything for a bit -- buy back in when this calms down" type stuff?

I mean things as simple as rebalancing, to a bit more complicated like tax management, or trading rules. I want the mechanics of portfolio management, but I don't want somebody else's portfolio. You're still choosing from somebody else's portfolio with Motif.

If somebody wants to disrupt, quant hedge fund for retail investors would be the one but I suspect it's never going to happen because of the perverse incentives that exist to not do that. There used to be the Quantopian-Robinhood method but neither side wanted to go in the direction. I don't see these firms as truly disruptive.

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