Robinhood: Introducing the Presidential Election Market
go.robinhood.com
go.robinhood.com
Of course it doesn't actually close out until January 6th. Since effectively the election will be decided tomorrow or the day after at the latest there's not going to be really any movement in this market after that time. So right now it looks like close to 200,000 shares have been sold. Robinhood gets to sit on those for 2 months and let's say make a fairly conservative 8 to 10% and then pay all the money back at the end. It's a fantastic way to get a zero interest loan from your people while your people get to gamble and do something fun.
Um, that doesn't sound conservative at all! 7%-ish is what we expect the whole US stock market to return in an _average_ year, 6x that would be insane.
The recent returns on VTI are irrelevant. The market goes down, the market goes up and nobody can predict which way it will move next. We only know how it behaves over decades, as a result of economic output.
Robinhood, money market accounts, and HYSAs are offering high interest rates because we are in a high interest rate environment. (Which usually correlates to a high inflationary environment.) So yes, if Robinhood is behaving like any other bank, they are happy to offer their customers 4.5% in order to buy bonds (and whatever else) at 5-6% because even though the margin is small, the volume more than makes up for it.