It's plain unethical and ridiculous that 20 year olds with no steady income get access to highly leveraged financial instruments that can ruin them for life.
Many options trades have an expected loss of nearly 100% - the same cant be said of holding stocks. Society has decided its OK to own houses, which certainly can decline in value, but outlaw ponzi schemes that for a substantial number of people are virtually guaranteed to wipe out their investment.
I don't think an age restriction is appropriate, other than 18/21/25, or some other reasonable definition of adult. But, I think it would be sensible to only allow options trades up to a certain percent of one's provable net worth - lets say 10% below $100k, 100% over $1M, or something like that.
None of these instruments can ruin a 20 year old for life. Worst case is 7 years of trashed credit from a bankruptcy.
And I have no defense for the "something else"s -- casino gambling exploits people in exactly the same way: https://www.theatlantic.com/magazine/archive/2016/12/losing-...
You could even cash advance on a credit card, buy a car, and wreck it and be in the same financial situation as you would if you gambled it away on robinhood.
Which is kind of terrifying for a country with democratic input. If people can't be trusted with their own money, why should they be trusted to decide who controls the American nuclear arsenal?
With this analogy, I think you inadvertently supported the opposite argument: the nuclear arsenal itself is not democratically controlled. Rather, we elect someone who controls it (with several layers of checks and balances).
Is it just the willingness for military officials to follow the order? I'm pretty sure the president doesn't have to consult with congress or the supreme court before doing this.
Ultimately, I'm not sure a free society, a welfare state, and universal suffrage can all co-exist in the long term.
I think any two could survive, but all three seem like a longshot.
I'm actually having trouble figuring out which two I'm rooting for.
In a democracy, the people (and their legitimately elected representatives) are also allowed to structure markets and decide on what business practices are and are not allowed
Makes you wonder about the risk management practices and incentives of that particular credit card company.
Famous example: https://www.investopedia.com/articles/investing/121515/how-s...
It looks like the person in your example was selling a call, which has potentially unlimited losses - that was a rather poor decision on his part. There are much safer methods of making "the same bet".
Gambling is a random game designed to extract money from people. The stock market is a math game that doesn't care if you gain or lose.
I have both RobinHood account and IBKR and I don't see how I could do an unhedged short.
As a retail investor, the only way I see to short is via options and there you can only loose 100%.
It also bears mentioning that an average result in Vegas is: you loose.
Benchmark returns for stock market is S&P 500 which is 8-15% yearly return (over multiple years, depending on how good the economy is during those years).
And the chances of doing better are higher than chances of loosing money.
So many of these stories involve highly-leveraged options stuff, reminiscent of stuff that even my schoolbook US history summation of the Great Depression described as super-dangerous.
Do people not just gamble on credit? I highly doubt casinos care about the average person's financials, as long as the money ends in their pockets.
I see no difference between the stock market and gambling, sure there's "smart strategies" to the stock market but at the end of the day it's the same result for anyone with a gambling addiction to either.
In stock market, you win on average.
Not to mention that stock market is much more a game of skill than game of chance (as is most of casino games).
I did very well in stock market and I don't feel like I'm gambling. I recognize there is risk and I lost money on some investments but I can usually pin point the reason I lost. It's not random.