Goldman Sachs

Robinhood (part 2): Democratizing Access to the Financial Markets

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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.

So cool.

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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.

See Also:
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
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How to Hire Insecure Overachievers

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“Our ideal candidate is an insecure overachiever.”

That’s what the McKinsey partner told me during my interview. Yeah, once upon a time I wanted to work at McKinsey & Co. They didn’t make me an offer. I was certainly insecure enough, but maybe not overachieving enough.

Not a secret: The people who go to work in management consulting and banking are insecure overachievers.

Insecure overachievers make great employees because they work long hours to win approval from authority figures. However, they are a very tricky species. They love prestige. They don’t like risk. They need social acceptance. Banking and consulting are not considered socially admirable professions these days, but remember – insecure overachievers don’t care what the 99% think. They need social acceptance from the 1% who matter.

They love structure and a clear path for advancement, but want to keep their options open. That’s the most important thing to an insecure overachiever: lots of options. It can never appear as though they have reached their final destination, because that would imply that they have exposed their maximum potential. As long as they appear to be in transition, they can claim to be holding out for something better.

The “up or out” policy instituted in law, consulting, and banking is perfect for insecure overachievers. Maybe McKinsey is just a springboard to an executive position at a Fortune 500 company, and Goldman is just a stop before partnership at a $50B hedge fund.

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As Wall Street bankers migrate to Silicon Valley, they bring their hiring practices with them. Insecure overachievers could never admit that their final station in life is a shared desk at Facebook. That’s why Google recruiters often tout this selling point: The best part about working at Google is the job you can get after you leave Google.

Because insecure overachievers need Google on their resumes before they are ready to start the next billion-dollar company.

Google gives new hires teddy bears and security blankets.
Google gives new hires teddy bears and security blankets.

See Also:
How Wall Street recruits so many insecure Ivy League grads –Vox