I love that Robinhood allows me to flip stocks on the toilet.
I used to do all my trading through Interactive Brokers, but its secure login system required that I be tethered to a desktop.
With Robinhood, I place orders with a thumb swipe. With a sufficiently volatile stock, I can make or lose a few pennies every time I visit the bathroom, which is about 76 times a day because I have issues.
I used to think that maybe the financial markets shouldn’t be quite so democratized, maybe stock-picking should be reserved for sophisticated investors. Who am I kidding? Individual stock traders suck no matter what brokerage they use.
Retail investors are uninformed traders who underperform the market. Wall Street calls them wealthy hobbyists. Not me, of course, but the other retail investors.
Brokerages love wealthy hobbyists. Whether it’s E-trade or Scottrade or your beloved Robinhood, they sell orders placed by people like you to wholesalers. Wholesalers try to fill your orders internally because they know it’s generally a good idea to bet against dumb people.
Robinhood’s real goal isn’t to spread financial literacy or democratize market access. The goal is to democratize the illusion of access.
Just like Uber lets anyone feel baller by hailing a black car, Robinhood lets anyone feel like Jordan Belfort flipping stock orders.
We don’t care about the creation of wealth so much as we care about the feeling of wealth.
If you want to know what democratized access to the financial markets really feels like, open a client account at Goldman Sachs. The minimum deposit is $50 million. Want your wealth managed by a hedge fund like Bridgewater Associates? Minimum buy-in of $100 million.
With that kind of money you could buy your own Robinhood.
1. Robinhood (part 1): Feeling Like a Rock Star is not a Trading Strategy
2. We Are All Useless Morons that Suck –Dragonfly Capital
3. How Your Order Gets Filled –bloomberg