Robinhoods advertising is disgusting. Encouraging people who make very little money to gamble that money on the stock market is just taking advantage of those who don't know any better - do you really expect to compete with the investors paying 20k for a Bloomberg terminal, who get all the news 15 minutes before you can even hear about it?
If they had been advertising about how low their fees are, and how you can invest your savings in ETFs or something I would have no problem with it since that is a reasonable thing to do. But suggesting that the average low income person should be day trading is just predatory.
I even saw an ad (not 100% sure if it was Robinhood but a similar product) that was telling a story about how someone was in tens of thousands of dollars in debt, and day traded until they were out of debt. All these trading apps seem to be targeted at people who will almost certainly lose money, and who generally don't have much to lose. I mean I have no problem with an app advertising an easy way to do day trading, just don't act as if it is anything other than gambling.
I'm not sure I can say I'm disgusted by assuming hourly workers are intelligent.
Why is it that investing is gambling only for the poor? Is the implication the poor people are less informed and less intelligent?
> do you really expect to compete with the investors paying 20k for a Bloomberg terminal, who get all the news 15 minutes before you can even hear about it?
Not if you're day trading, of course not. But letting someone who stocks sodas all day buy a couple Pepsi shares seems highly legitimate. The stock market will be more intelligent with more opinions in the pool, not less.
Stock picking is gambling for pretty much everyone, even professionals don't beat the market most of the time.
Income is somewhat correlated with intelligence, but thats not the issue I have with marketing to lower income people, since as you said there are lots of very smart people at all income levels. The problem is that lower income people have less to lose, and are less able to recover from losses, so I am more concerned with them loosing money than if a well paid professional looses their bonus or something in the market. Also lower income people are more likely to try more risky methods of getting money, and are more likely a member of a vulnerable demographic (ex. pyramid schemes have a lot of success targetting recent immigrants without much income).
I think there is a lot of value in letting someone who stocks sodas all day buy some Pepsi stock if they have some money free to play around with. I've done some day trading, it's a little fun (and a lot stressful, so no more). The problem I have is when Robinhood tries to convince that person stocking sodas that they have some special insight that will let them beat the market and make money investing. That's how you get people investing and loosing more than they can afford.
> The stock market will be more intelligent with more opinions in the pool, not less.
Not sure where this came from, but the other institution where there were a lot of opinions (democracy) and even equalized voting power does not seem to confer the same benefit.
If there is any relations between the functioning of a democracy and the size of its electorate, it would seem it's a negative one.
>I'm not sure I can say I'm disgusted by assuming hourly workers are intelligent.
They don't need to make assumptions, they run an app that tracks the trades of every single person, they know that their customers aren't making money trading stocks.
So, IQ and income are related, but I'm not sure if the causal arrow points both ways. Secondly, I think the 1) make an emergency fund 2) pay debt via snowball method then finally, 3) invest for retirement hierarchy is the most effective path to financial freedom, and given that poor people are more likely to have debt and no emergency funds, it's an okay assumption that they are investing prematurely if they haven't taken care of items 1 & 2.
IQ is fake [1], but anyway Robinhood isn't purporting to be a personal finance flowchart. Vanguard would be the opposite of Robinhood and they don't help you establish an emergency fund or pay off debt, or do any checks on if you're rich enough to invest. Robinhood's just another brokerage with a clean UI.
The biggest problem is how Robinhood promotes trading individual stocks and cryptos, often with leverage. I'd laud them as a democratizing force if they guided people into safe long-term investments. But that's not what gets the buzz, and it's not what gets them more users.
I believe RH's revenue is mostly from payment for order flow (as opposed to, say, interest on AUM), so on top of what gets them more users, higher trading activity is what gets them more dollars.
To the extent that they're advertising - or even just increasing the availability of - derivatives trading to unsophisticated retail investors, I agree with you. But taking unlevered long positions in individual stocks is not that much worse than investing in ETFs, and saving money to take unlevered long positions in individual stocks, for someone who would otherwise not be saving much money (and who might otherwise be literally playing the lottery with that money) is often a drastic improvement. After all, it's just as hard to underperform the market by picking stocks as it is to outperform it; while the risk-adjusted expected return is worse due to the lack of diversification, the non-risk-adjusted expected return those traders will get will equal the market return, with some degenerate exceptions like Hertz.
The more people invest in ETFs/indexes/passively, the more opportunity there will be for active traders (indices by definition are adjusted to average and leave underpriced assets in the index), and so I don't think it's that surprising we're seeing more people try.
What to do with money is kind of like politics - people have different risk preferences/processes/deep rooted beliefs on what is right. And like politics, there is "no one right answer" but instead what compromises one wishes to make and what is relevant to their specific situation (ex. gun holders in middle of nowhere farmland vs. anti-gun urban dwellers).
I think Robinhood is net positive and kind of like political voting in that way - it empowers people to do something they couldn't before, and allow them to test their value systems in the real world.
I agree that ETFs are the sane default choice (assuming you curate the choices to low-fees and sensible aims). But there are definitely places where individual consumers can feel close enough to the ground to feel some specific market trends.
For example, just look at the how many PC hobbyists made a mint on AMD shares just by noticing "they launched a killer product in a time period when their biggest competitor has been whiffing badly?" They may not time the market perfectly, but plenty of them will end up well in the green.
This is really the classic, pre-ETF/mutual fund stock-investment model, though-- long holds and relying on actual performance, rather than day-trading and riding on volatility or diversified large numbers.
> who get all the news 15 minutes before you can even hear about it?
It does not really matter if you are in for long haul, and you should be. Stock market should not be played like a poker play where you need to keep an eye on every single move. If that's the way you are doing it then it's a gamble.
I signed up on Robinhood and made a killing doing day trading, until the govt stepped in to 'protect' me from playing this rich man game.
I think giving regular people a way to easily join the stock market could help fix some of the problems with capitalism. People need to know their strength in numbers, and that corporations are only answerable to their shareholders
There's some discussion here about how destructive/unwise trading services like Robinhood can be.
If you're looking for an alternative, I've had a great experience with "robo-advisers" (Betterment, specifically). Many of the same advantages as something like Robinhood: $0 account minimum, 100% digital (create and manage your account through the website/app, no paperwork, no representatives), easy to cash-out with just a couple days' notice. The difference is that they automatically allocate a diversified portfolio for you and let you control simple things like the stocks/bonds percentage you want to have (a proxy for risk-tolerance). They do general investment accounts (analogous to index funds), as well as IRAs and savings. Fees are modest and automatically deducted from your growing balance. Dividends and gains are automatically re-invested in a tax-efficient way.
For several years now I've put all of my excess money into Betterment aside from some basic emergency savings. If you want a minimal-effort way to make your money grow and/or don't have much to invest, I highly recommend it.
Also: I promise I'm a real person and this isn't a shill :)
Betterment is easy but if you have more than a few thousand bucks to invest I would just open a Vanguard account and put your money there. If you have no idea what you're doing just use a target date fund, otherwise just buy stock/bond ETFs in the mix that you want. Not worth ~0.4%/year in fees (doesn't sound like a lot until you realize it's $400/year on $100K) to have someone else do that for you.
In the years I've been using it the fees have totaled 5.2% of the earnings over that time (current balance - invested, not total account balance). It's not nothing, but personally I place a high value on simplicity and peace of mind in my life, so it's worth it to have a simple and excellent user-experience in the app, as well as the ability to do things like withdraw and deposit with literally the tap of a button.
The target date fund I use, SWYJX (Schwab Target 2055 Index Fund) has a net ER of 0.08%. Over 25 years, the difference between 0.4% and 0.08% can be hundreds of thousands of dollars.
Like Betterment, SWYJX an automated portfolio, but one adjusted for age, not some individual profile.
You're nuts if you think 5.2% is reasonable. Let's say for simplicity that's 1% per year for 5 years, if you chose VTSAX instead with an expense ratio of 0.04% (yes that's right) you're looking at total fees over 5 years of 0.2% versus 5%
Compound that 30 years out, you would loose hundreds of thousands of dollars for a pretty UI. Forget that, take a day and go setup a Bogleheads [1] portfolio.
I'm willing to pay a 0.25% management fee to prevent SIM swapping attacks. Vanguard will not allow you to remove SMS as a 2FA option, and their Yubikey authentication doesn't work with Firefox, which is pretty unique. The little millennial brokerages (Robinhood, Wealthfront, Betterment) are all more secure.
Yes, you can. Vanguard is a brokerage, just like E-Trade, Schwab, Fidelity, etc. They provide all sorts products, such as IRAs.
A good reason to use Vanguard as a company is their mutual funds. (Though you can trade Vanguard mutual funds elsewhere, they'll usually come with transaction fees.) Mutual funds are arguably superior to ETFs for many investors, in a few ways.
* Mutual funds are fractional by nature — you can trade as little as $1. Right now, only a very small handful of brokers support fractional shares of ETFs.
* Since MFs aren't traded as whole units, you can set up automatic investing. Let a certain % of your paycheck go into the MF every month. Not possible with ETFs on most platforms, a notable exception being M1.
* Since MFs only settle their NAV once a day, you're discouraged from compulsively checking your portfolio every few hours. If the market is temporarily down, you won't see it reflected in real time. Some people consider the real-time aspect of ETFs superior, but for long-term investing, this lack of an instant dopamine rush means it's easier to just not think about it. Fewer emotional decisions.
* Mutual funds can be "funds of funds". Regulations prevent ETFs from doing the same thing. A good example of a FoF is Vanguard's target date retirement funds, which are nearly exactly equivalent to a Boglehead-style three-fund portfolio.
MFs have a reputation for being expensive, but Vanguard's have some of the lowest fees on the market. MFs also can be tax-inefficient, but Vanguard has patented a loophole that makes them as efficient as ETFs when held in a taxable account.
Vanguard is also a great company; easily my favourite investment company. Its ownership structure is inverted: The company is collectively owned by its funds, which means that you, as a MF shareholder, will own a part of Vanguard.
Note: The above points about MFs are largely moot with robo advisors like Betterment.
I highly doubt it beats S&P 500 so you can do better by using Robinhood and invest into S&P 500 tracking stock like IVV. And the risk is more or less the same. It's not like Betterment would do well if S&P 500 tanks.
I used Wealthfront for a while and I switched to trading stocks.
The idea of roboadvisor sounded nice but their returns are sub-par because their allocation strategy is, by necessity, very risk averse. They put a lot of your money into bonds and similar sub-2% investements while in the last 50 years S&P returned 8% on average.
That 8% return is about as risk free as you can get and paying Betterment fees to do worse than that makes no sense to me.
BTW: if you invest in FAANGT (FAANG + Tesla) equal-weight portfolio, you'll do several times better than S&P 500 with very little risk. At lest for the next few years.
The S&P isn't risk-free! The only risk-free asset is US Treasury bonds, because we assume US Treasury can't default on payments.
The goal of a robo advisor, for most people, is not to beat the S&P, but to balance risk and reward according to the individual's time horizon and risk profile without any manual intervention.
Beating the S&P is a fun game for people who want to spend time on it, but this isn't for the general populace.
If you want to beat the S&P and you're okay with above-average risk, but also want a completely hands-off approach, I would suggest 100% PSLDX [1]. It's a hybrid active/passive mutual fund that uses buy derivatives (futures and swaps), collateralized by bonds, to boost S&P returns. The high (1.01%) fee only looks high until you look at the returns; most years, it does 20-30%. Its return in 2019 was 52%. In theory, it should do only slightly worse than the S&P in a bad year.
Another interesting futures-based fund is NTSX [2]. It's pretty new, but it's consistently beat the S&P since inception, and did very well in the March dip.
For what it's worth, I'd expect that leverage to come back to bite you in the ass in a rising interest rate environment. Granted, we haven't seen a sustained period of rising interest rates for 40+ years, but it's not obvious that that will continue.
I would say that PSLDX has proven itself. Max drawdown since inception (2008) is about the same as VFINX, less than VTIAX/VGTSX. Return in 2008 was -33%, compared to -37% for the S&P 500. In March, it dipped more than the S&P, but not terribly so. The only year it didn't significantly outperform the S&P was 2013.
> That 8% return is about as risk free as you can get
Yeah no. The S&P 500 lost about 35% of its value in 2008. If that's the year your kid starts college or you were planning to put down a big down payment on your first house, you'd be completely fucked.
I used to think the same way as you, but when you get a little older and major life milestones and/or retirement aren't distant concepts it'll change your perspective.
I think the standard advice is that whatever part of your savings you expect to spend in the next 5-10 years shouldn't go in the stock market, for exactly this reason.
> you can do better by using Robinhood and invest into S&P 500 tracking stock like IVV
That's an interesting idea I hadn't considered. I believe robo-advisers tend to beat the market by a little bit, but I could be wrong on that. I started investing in force at the end of 2016 and the time-weighted, annualized returns on the stock portion of my portfolio are 6.39%. So make of that what you will
> They put a lot of your money into bonds and similar sub-2% investements while in the last 50 years S&P returned 8% on average
Betterment lets you pick your percentage of stocks vs bonds; you can set it to whatever you want and your portfolio gets re-allocated to match. I'm young, so mine's set at 90% stocks. I imagine I'll gradually decrease that over time.
I use Wealthfront, you can change your risk tolerance the higher levels have very little in bonds.
One of my accounts i think is at like a 9 or a 10 (max 10) it currently says US stocks 36.4%, foreign stocks 31.9%, emerging 16%, dividend 10.3%, and muni bonds 4.7%, .6% cash.
Online gambling has been getting more and more legal throughout the US. Sports betting online has been mostly legalized as well as some online "games" depending on the state.
In the UK we are overrun by online gambling to the point where parliament may legislate - it's a complete cancer.
Online gambling is fine in principle, but it needs regulation to avoid overly predatory practices.
FWIW I'd rather people shoved some money in the stock market (but not options) than on (say) the football - most bad stocks do better than the ridiculous compound bets advertised here.
the stock market itself is the result of a conscious policy decision because it's a tightly regulated legal fiction, not some random thing that plopped out of thin air. Trading securities is subject to countless of regulations, which is what makes it attractive to investors in the first place.
So, the fact that stock market allocates capital efficiently is true in a broad sense but says nothing about how participation or regulation ought to look.
The second statement also is too vague. Stock returns should arguably be available to all, but activities like day-trading almost exclusively produce losers. Pretty much the only reliable way for the average Joe to make money on stocks is to passively invest, which again means this does nothing to justify the existence of Robinhood's model. Distributing the returns of stocks and design of the market are orthogonal issues, or if anything justify more restrictions.
If you want equitable distribution of stock returns you put everyone's money into a sovereign wealth fund that invests into some index fund and send everybody a check at the end of the year
>Stock returns should arguably be available to all, but activities like day-trading almost exclusively produce losers. Pretty much the only reliable way for the average Joe to make money on stocks is to passively invest, which again means this does nothing to justify the existence of Robinhood's model.
I mean, the "optimal" way to invest is to buy a passively managed index fund and don't touch it until you retire, but how much of that should be baked into the regulation? Should we make the stock market off limits to the average joe except the most optimal choice?
>If you want equitable distribution of stock returns you put everyone's money into a sovereign wealth fund that invests into some index fund and send everybody a check at the end of the year
So... the SSA? The other problem I can see is that in a country that's distrustful of the government, citizens might be reluctant to hand their retirement plans to the government. After all, the fund can be raided by politicians for short term spending or otherwise mismanaged, causing adjustments to be made to the payout structure (eg. cutting benefits, or forcing people to retire later).
There is no "optimal" way to invest. Every person/instiution has different risk limits, obligations, and time horizons. It's not a one size fits all kind of thing.
Regardless of how you feel about their marketing practices, it is clear that investors are investing in the customer base.
As Robinhood continues to grow, they can/will offer more and more products (mortgages, bonds, DAFs, etc), eventually becoming a one-stop shop for millennials/zoomers/whatever.
For example, currently if you want to invest in a crowdsourced real estate fund, you need to use something like Cadre/Crowdstreet. If RH can eventually support all these possible investment avenues, they will have a lot of room to grow in the retail space.
Given their current laissez-faire approach to investor education/responsibleness, the question will become whether this level of investing ease is good or bad.
Robinhood cannot easily expand its product base because a majority of their current revenue is from selling order flow. Most of the products you listed as well as other seemingly easy to offer products are going to be tough to sell to someone because there's no easy way to offer free/cheap transactions. It's very tough to convert a non-paying customer base to a paying one. Additionally, at least for mortgages and bonds, I don't see how Robinhood would ever be able to be competitive in either of those spaces.
There’s a lot that can be better here and Robinhood’s approach to getting a foothold has been smart.
I use Fidelity for everything, but their software is mediocre at best. I hear vanguard is worse.
The regular banks are ten times worse than fidelity for basic actions.
Other startups that have tried to make this better (Simple Bank comes to mind, but there are a couple of others) typically sell out or only focus on basic banking which is not helpful.
Robinhood has better software and is positioning themselves to be a serious player long term.
I think vanguard is perfect for the type of investor they attract. I probably log in to my vanguard 2 or 3 times a year. It is set to autodraft from my bank account and buy index funds every month and reinvest the dividends. So it is set it and forget it.
A slick interface and UI team that is trying to figure out ways to increase user engagement is just asking for your users to get in there and gamble away their retirement savings.
I agree with you both. I'd be worried if Vanguard suddenly became like Robinhood.
There's a new version of the Vanguard app on the App Store called "Beacon" that includes a very useful visual overhaul (account balances & performance are front and center) but keeps that wonderful Vanguard focus on, well, staying the course and not much else.
That might be by design. Vanguard is best used for funds(their index funds are nice).
They don't really want you actively trading or speculating (see quotes by the founder).
Tastyworks has better software for options. TD Ameritrade also has ThinkOrSwim which is pretty good overall. None of those can hold a candle to Robinhood's (perceived!) simplicity - even though I do think it's TOO simple.
I think 'too simple' is like what some search company CEO said to Larry Page about page rank being 'too effective' when Larry/Sergey were trying to license it to him before starting Google (people won't stay on the search portal to look at ads because they find their result too quickly).
It's a lame excuse. None of those old search companies exist anymore.
If you want to drive most users to just use index funds you can have great software that does that while also having great software that allows users to do everything else they may want to do (like have a checking account, wire money to other banks, automatically invest, etc.).
Having shitty software and then pretending it's 'by design' is just a lazy justification.
If Robinhood can build up a userbase by focusing on a neglected area they can expand and take over everyone. Their downward pressure on fees is already a win for users, if they're able to get through growing pains (unacceptable downtime/scale issues) I don't see why they can't be as big as Fidelity.
I don't know if their software is actually that good, but there's definitely an opening here for someone that can get a foothold.
> I think 'too simple' is like what some search company CEO said to Larry Page about page rank being 'too effective'
This is fine for search results. It is NOT fine for complex financial instruments where people can lose money.
There's only so much you can 'simplify'. In this particular case, you can only make the UI itself simpler and easier to understand and operate. They can't make options trading itself any simpler. In other words, they can't make the domain itself any simpler by just throwing UX at it.
Specifically, they can't make it any simpler by hiding information. The information is needed. This is why other trading platforms look 'busy'. Because trading options is not simple. Pretending that they are only lead to losses.
I think we probably actually agree more than we disagree on what we're talking about.
I agree simplicity that hides relevant information is not good.
My complaints about Fidelity are not that it's surfacing too much relevant information.
Some quick things:
- Fidelity has tons of menus that hide things in hard to find places.
- The UI is slow, and the actions are poorly designed. Want to wire money to someone else? That's hidden under transfer -> to bank account -> new bank account -> that I don't own. Everything they have is like this, buried and weirdly named.
- A link might load an entire different section of Fidelity unrelated to your actual account. Tons of spam on the front page about resources that are irrelevant or just trying to sell you some Fidelity crap.
- Want to buy a call option? Small modal pop up window that's hard to use.
I'm not arguing for simplicity by hiding relevant information, I'm arguing for good UX - focus on the stuff that matters and organize things in a way that is actually good for users.
> "This is why other trading platforms look 'busy'. Because trading options is not simple."
I think other platforms look busy not because they're showing relevant information, but because they're hacked together over years by people that previously relied on in-person traders and phone call support (and except for Vanguard, arguably scamming users via active trading fees). It's a mess of legacy systems and UI that doesn't have to get better because there aren't that many players and it's a hard market for competitors to enter.
HavenMoney (acquired by CreditKarma) had an approach to this I really liked, they basically did best practices for most people. Index funds, emergency savings, 401k handling - all automated. Something like this by default that also had a trading platform would be great. It'd also be cool if it always compared a user's active trading to what would have happened if they left their funds in a total market index.
The established companies can still be disrupted by great execution. There is potential there. Robinhood can still do great by having an elegant interface AND showing relevant data. Show the greeks, even if that means they will have to come up with fancier indicators.
For instance, Delta. Show me probability of profit instead, right in the list, as it is derived from delta. Show theta, even if you have to come up with a cartoon graphic to illustrate time decay. Show a flame when IV is high.
Suggest other strategies if the trade looks bad. Don't show that something is up 1500% just because there were no bids previously.
And so on.
Not trying to plug tastyworks, but their desktop interface is leaps and bounds ahead of what Robinhood does on either platform, and it is easier to understand too. What they have NOT figured out is how to get the same experience on mobile.
If Robinhood can figure that out, everyone else is in for a bad day (even with their horrible fills).
> HavenMoney (acquired by CreditKarma) had an approach to this I really liked, they basically did best practices for most people. Index funds, emergency savings, 401k handling - all automated.
This is great. Automated investing is the way to go - and can be surprisingly difficult to do. There are platforms that do similar things, at least for index funds, such as Betterment. But they tend to have higher fees than Vanguard.
I don't know, Vanguard is pretty good for what its supposed to be used for. You can get money in and out real fast. Even very large sums of money. You can trade without waiting for full settlement and all that, to make all the proper large rebalancing trades quickly without losses. You can have all your retirement accounts in it and tax management and integration works well.
Their flows are all pretty smooth, you really don't need slick UI to make 3-4 trades a month at most.
Of course you do need slicker UI when you are essentially offering an online casino to your users. Nice colors, engaging UI, etc is important to keep your audience entertained and to have them roll the dice more often.
I would choose Schwab over Robinhood any day of the week. I used robinhood and its data/metrics with stocks was extremely lacking and un-sophisticated. In addition order fulfilled timing was slow, I would never trade large amounts of stock with the app. Its all showy UI and bright colors. Which is fine as it seems to be getting alot of users using that method and the idea of "why use your Dads/Moms trading stock trading platform"?
I have a Schwab account, but it really bothers me that they're constantly trying to push their services like financial planning or investment advisors. Even if you look for target-date funds they'll hide the index one and push the expensive active ones. Compared to their website Robinhood is calm and minimalist, at least in my opinion.
Not really. You ask for level 1-4 options trading and they have you select from a dropdown how many years experience you have. It gets approved quickly. I've done this on TDA, IBKR, Merrill Edge.
All brokerages are like that. Back in the early 2000's, when I first enabled options trading, I had to fill out a paper form. This was also mostly just checking a box. If you could put a stamp on an envelope, you were qualified to trade options.
TD Ameritrade and thinkorswim (their client they bought out) are both quite good. But not great for novice investors, which is where Robinhood crushed them.
I think it's a net positive thing for people despite the doom and gloom stories we hear.
I'd say "simpler interface" rather than better software. Unless youve seen under the hood of Schwab/TD and Fidelity. I would expect, in some sense that Robinhood has cleaner aspects because of less legacy, but its also may be much less powerful and robust.
I have Fidelity as well and prefer their iOS app (at a glance asset overview) and Active Trader Pro Mac client (options trading) to Robinhood. Different tools for different tastes.
The iOS app is okay, but I think it's extremely slow and a lot of things require the web UI (which has tons of buried menus and hard to find features).
Ah someone mentioned Active Trader, which I think is pretty decent. If you're trading a lot look into Interactive Brokers. I think they're still top of the line for publicly offered trading.
Robinhood also has their feet wet in crypto, with the potential to compete in Coinbase (a multi-billion dollar company of their on, which I hear is profitable) in a serious way if they wanted to.
The investors are preying on their users who think that they are investing. I'm not 100% familiar but doesn't this app allow you to re-invest your paper gains without actually having anything material? [0]
We're all told to invest, so it's only natural for millennials/GenZ/etc to want to do that. Everything costs money, so if you can "make more money out of the money you already have", then that's quite appealing. As if creating money out of money makes any mathematical sense.
I think in the end, all these "investment" apps are really just shuffling money from users. How else can you "make" money without taking money from someone else?
> I'm not 100% familiar but doesn't this app allow you to re-invest your paper gains without actually having anything material
I can't parse this sentence.
You can 'reinvest' non-settled funds. This is the definition for any margin account. "Paper gains" is usually in the context of paper trading, which the app doesn't allow. So this doesn't make sense.
Your link is not working for me, but the case for that customer was a lack of understanding, he didn't really owe 730k. It was a temporary balance. Which is the kind of thing you need to understand if you are trading options.
> We're all told to invest, so it's only natural for millennials/GenZ/etc to want to do that. Everything costs money,
Robinhood is mostly used for 'gambling'. If you want to invest, you should open a boring account in Vanguard, setup automatic deposits in VSTAX or similar (or manually on VTI), but otherwise forget about it. That's investing.
Playing around with short term market fluctuations is either trading or gambling.
> so if you can "make more money out of the money you already have", then that's quite appealing.
And yet that's what people do. If you are not doing the same, you are doing yourself a disservice.
This concept doesn't only exist in stocks. For instance, take a savings account. It appreciates over time. The reasons why are left as an exercise to the reader.
> As if creating money out of money makes any mathematical sense.
But it does. It's not about money creation, it's about wealth. Wealth is being created all the time. This is why the long term market tendency is always up. The moment we stop creating new things is the moment this will stop.
> I think in the end, all these "investment" apps are really just shuffling money from users. How else can you "make" money without taking money from someone else?
Congratulations. You have discovered trading. Someone buys, someone else sells.
Note that this is only a zero sum in the short term.
> Everything costs money, so if you can "make more money out of the money you already have", then that's quite appealing. As if creating money out of money makes any mathematical sense.
Do you have a job? Does your employer make money? Aren’t they “making money out of money” by paying you?
The use of capital to generate wealth is one of the basic features of our society.
You're exactly right that they are making money out of money by using me. But me, myself.. I am not making money out of money. I do not have enough money to make more money out of what I have. I get money by exchanging my labor with my employer for money.
In turn, the company takes what I make and sells that for more money. The company is who is truly "making money out of money". The less they pay me and/or the more they sell, the more money they make.
If you do not have sufficient capital to begin with, you cannot make more money out of money (i.e. you cannot generate wealth)
When the company makes money, that’s actually the company’s shareholders making money. If it’s a public company, you can be one of those shareholders by investing in the stock market.
I assume the largest shareholders have the most money. I work for close to min wage; if they raised my wage, the shareholders will get less money off of the work I do.
What I'm trying to get at is that if you already have wealth, you can turn that wealth into more wealth. But people who do not have tens of thousands of dollars a year to "invest", they cannot become wealthy. This is why I say apps like RH or other "investment" apps or the lottery prey on poorer people. They lower the barrier of entry where we spend what little we have on the dream of becoming wealthy, when in reality, it is our wealth being taken from us.
> But people who do not have tens of thousands of dollars a year to "invest", they cannot become wealthy.
I agree with that - the average rate of return on capital is not high enough to turn a poor person into a rich person. At best it could help you retire after many years of labor.
> They lower the barrier of entry where we spend what little we have on the dream of becoming wealthy, when in reality, it is our wealth being taken from us.
If you make safe diversified investments in Robinhood, your money isn’t being taken away. It’s just going to accumulate slowly. Robinhood is a much better actor here than a shitty fund with 1% fee load, where a lot of workers are encouraged to save their money.
If you can do much better than the average rate of return, by starting your own company, or picking the right stocks through some special knowledge, you could actually get rich, but the odds are that you fail. Robinhood does harm by encouraging people to engage in this behavior.
How does a person become rich? You mentioned shareholders, so that's one example we can explore. They get richer off the work I do by selling what I make/provide for more than they pay me to make it.
If they paid me more and kept the exchange value of the produce/service the same, then the shareholders wouldn't profit as much while conversely giving me more money. By the shareholders exploiting my labor less, I can be richer.
If I have enough wealth, I could start a company as you suggest. I could be like the shareholders where I pay my employees as little as I can get away with and selling for as much as I can. This would help me and my shareholders turn money into more money.
But again, it is only through the exploitation of others that this is possible.
Another example of getting rich is owning property. If I have enough wealth, I could own not one, but two homes and charge rent to people who need a place to live. As they toil away at whatever job they're doing, I get this "passive income" that greatly increases my wealth while stunting wealth growth of my tenants.
We all want to be rich, but not all of us can be rich at the same time, otherwise, none of us would be rich. It's in the definition of being rich: to have more than others. But to have more than others, you have to exploit them.
And, tying this all back to your first comment describing one of the basic features of our society: using capital to generate wealth. You can imaging that this basic feature of our society makes it such that wealth clumps together. The more wealth you have, the easier it is to grow that wealth; it's like a positive feedback loop if you're into systems engineering or a massive object if you're into space. And having no money or no wealth is actively bad, and you can probably model a negative feedback loop of that, with the ultimate outcome of death (there's probably some good charts showing life expectancy vs wealth/class out there that illustrates this).
This is just an observation of the society we live in. It might be obvious to you, but it's cruel to me and many others who toil paycheck to paycheck living in fear of running out of the little money we have.
> If you make safe diversified investments in Robinhood, your money isn’t being taken away.
Sure, Say I invest $1200 over a year. How much would it "grow"?
Also, that's $120/month.. what if I need the $120 immediately and can't invest that much.
I guess my question is, How much money do you need for RH to be worthwhile?
Your assumption that wealth is zero-sum is incorrect. If I run a homebuilding company, building ten homes with 10% profit margin so I can afford to keep a home for myself, I haven’t deprived anyone of that home. I used the price of nine homes to buy a bunch of wood, concrete, and human labor and turned those inputs into ten homes. It’s not zero sum - the amount of wealth in the world actually increased.
Nations with economies that encourage capital investment don’t just distribute wealth differently - they actually generate more wealth. It’s possible for everyone in that nation to be richer, if the government uses taxation to redistribute some of that wealth.
I'm not following your example on the homebuilding company. It all seems nebulous to me. Could you help clarify?
Where is the 10% profit coming from, and how are you able to afford a home for yourself from the ten that you built?
Are you using the profit off the other 9 homes to fund your own home? (i.e. the profit is the 10th home?)
Maybe the root question to all that is: What do you mean by "the amount of wealth in the world actually increased?" I don't truly understand that.
The only way you have profit is by not paying the laborers their worth who built the homes.
If you have a profit margin of 10% then you're paying your workers 10% less than what they should be getting paid.
Now, taxes and wealth redistribution sounds like a huge caveat to me. You tax the profits from the home building and redistribute it.
Why bother with the whole home building thing in the first place? It seems like extra steps Why not just build and give people homes and skip the the intermediary step of money?
Another question for your homebuilding example: Why do you think you deserve a house for essentially free using your "profits" while other people have to pay for the house?
What makes you better than them? (This is not directed at you, but the hypothetical homebuilder. If it's reading as adversarial, I don't mean for it to be.)
Your home building scenario with profit margins is a great example of how profit totally distorts motives so that the problem you're solving isn't meeting people's needs, but instead meeting the need of making more money.
In the US, we have a housing problem. We have lots of homeless. We have the technology to build people homes (even efficient, dense housing), but since it's not profitable, it doesn't get done.
For anything like that to get done in our society, it must be profitable. You can see this in action with how much of our public services are struggling.
> Maybe the root question to all that is: What do you mean by "the amount of wealth in the world actually increased?" I don't truly understand that.
Simple: a home is worth more than the wood that was used to build it, and me and the laborers are better off working than sitting on our asses, if the government allows us all to get paid for our work. The amount of wealth in the world actually increases when somebody has the impetus to make things happen.
> The only way you have profit is by not paying the laborers their worth who built the homes. If you have a profit margin of 10% then you're paying your workers 10% less than what they should be getting paid.
If I don’t get paid for running the homebuilding company, nobody is going to bother building the home, so the home doesn’t get built. If we “skip the step” of paying me for organizing things, you just have a bunch of unused inputs. My organizing effort is also labor, and if there’s a mismatch in the supply of managers and hammerers, competitive pressures will adjust how much we each get paid. The role of money here is to balance supply and demand, so the things that get done are the things that other people need to get done. With money, the needs of society at large drive planning (there are externalities that should be corrected by the government through taxation to keep this functioning smoothly). Without money, only the desires of people with guns who can force others to work for free are taken into account.
As a whole, the US has plenty of homes for everyone, but in some regions densely building new homes is mostly illegal, so not enough homes are built. These are the regions where there is a homelessness crisis. Unfortunately the government is terrible at things like deciding how many homes there should be and getting them built, so when it controls the planning process, not enough homes get built where they are needed. Better to just let the developers build as many homes as there is demand for, and tax them to pay for housing for the homeless.
> a home is worth more than the wood that was used to build it
I agree with this part, but it doesn't address why, though. The house is worth more than its material costs because of labor costs.
> The role of money here is to balance supply and demand
I don't think the role of money is to balance supply and demand, it is to facilitate exchange between items of different exchange values. It is a tool that exists outside of capitalism.
> so the things that get done are the things that other people need to get done
I respectfully disagree here. I don't know where you live, but I guarantee you there's plenty of things that people need that need to get done that doesn't get done. I argue that in a capitalist system, what is most profitable gets done. In some cases, what gets done aligns with the needs of the people, but in many cases, the needs of the people are not met. I think it should be obvious that a capitalist system cannot distribute resources effectively if you look at this pandemic.
I agree that our governments are mishandling everything, but that doesn't have to be the case. A government has the most resources to determine how many homes get built... they just don't do it, because ultimately, it's not profitable.
Look at any city budget and see where most of the money is spent: it's spent on the police budget, not on things that need to get done for the people, like building homes, or providng healthcare, etc.
Here is a simple scenario to illustrate that extra money is not created. We are at a market, and you are selling wine to me, but sell it for more than the cost it took you to make it. I'm selling books, but also want to make a sell them for more than their cost tome, so I sell it to you for more than I paid for it. If everyone does this, then you can imagine all prices rising and falling together. If the extra money we received goes back into the market for other necessities, then we didn't really make a profit. Profit is created when money is removed from the system and accumulates and is hoarded.
I'm going to be logging off for now, but I've enjoyed this discussion.
I would probably not use Robinhood, but it's fairly common for people starting out to open an account and do a modest recurring purchase of some index fund or other "boring" fund with low management fees. It takes time but it does grow.
>Say I invest $1200 over a year. How much would it "grow"?
Depends on the investment and depends on the market. Figure a few percent, which isn't a lot but save $1,000/year and it starts to add up.
Investing presumes you already have money. This may not even be feasible for the majority of Americans; according to [0], 69% of Americans have less than $1,000 in savings.
Let's say that I can save $1200/year for 10 years with an interest rate of 8%... After 10 years, it would have grown by about $5k. Some CEOs make that much in a day or week off of the exploitation of their workers.
I would spend ten years, a whole decade!! And this assumes that it goes smoothly with no emergencies, no medical expenses, and wage growth keeps up with cost of living.. All these things that don't happen in real life. After all, everything that's required to live (the bare necessities) costs money, which eats away at my savings while making someone with already a lot of money even richer.
If you take reality into account, I think it's a pipedream for people of lower socioeconomic statuses to be able to climb the economic ladder into a higher class.
Again, I'm trying to illustrate how there's very little positive vertical movement for the majority of people.
Yeah. So your investment has increased by 5k in the first 10 years. You only contributed $100 a month, which is doable for a lot of people, and go 5k for 'free'. In 20 years, it will have grown by 30k on top of your contributions. Again, assuming you never adjust your contributions.
Try the same calculation, but now with $500 a month.
Although 8% is optimistic, compound interest is really powerful.
It is indeed difficult to get ahead if you are paycheck to paycheck. It can be impossible if you can't even pay for your basic necessities.
But many people are not in that situation. They buy stuff they don't need. They buy new cars on credit - which is a depreciating asset with interest. They buy phones they also don't need - sometimes in multiple installments too.
Instead, try throwing anything extra you can scrape in investments. If you are aggressive about it, you can retire much earlier than you would be able to, normally.
> But many people are not in that situation. They buy stuff they don't need. They buy new cars on credit - which is a depreciating asset with interest. They buy phones they also don't need - sometimes in multiple installments too.
>
> Instead, try throwing anything extra you can scrape in investments. If you are aggressive about it, you can retire much earlier than you would be able to, normally.
Again, I don't think this is feasible for the majority of Americans, but let's push ahead with your premise that many people can scrape their way to an early retirement.
1) The length of time to accumulate that much wealth is really sad to me. Decades of living the one life you have as meek as possible under the hope of retiring early. Again, it's still a hope. Say you make $15/hr -> 1 year is $30k. After 20 years, you finally hit that $30k mark that takes you one year to make from wages. Idk man, that's super bleak to me. Obviously, the alternative to early retirement is that they work their lives away until they can't work anymore. For people who are not uberwealthy, early retirement requires a lowering of their lifestyles (I do understand that a lot of people find it fun or gamify it or find a way to validate cuts in their lifestyles). But they have to center their lives around it; it determines where they live, what you buy, what you wear, having kids, etc.
2). This is more of a question, but doesn't require answer.. just for thought provoking. Because these people are poor, are they not allowed to enjoy certain things like new phones, TV, entertainment? We've built our society to hold these things dear (save for the early retirement folks who have to actively ignore those pressures): We have ads that encourage spending, we talk about the American Dream... everything about our society encourages buying things, so I definitely understand why people do it. I'm guilty of it; one of the most exciting things is buying something. When things are so bleak, buying something feels good.. it hits that dopamine.
Both 1) and 2) are a consequence of the society we live in. It's easy to see 2), but a bit harder to see 1). If we had guaranteed necessities: food, housing, healthcare, etc, the early retirement folks wouldn't have to change their standard of living. The fact that poverty exists and that people struggle is an easily solvable problem with wealth distribution.
My point is, it doesn't have to be this way and that the pursuit of profit makes it this way. For just several handful of people to be as wealthy as they are, many magnitudes more of people have to live in poverty. We should be changing the system so that it benefits everyone, not try to find ways of survival within the system.
I think it's great to lower the barrier of entry to financial services and such but one thing I feel is lacking is the education component. There's not enough explanation, warnings, and documentation in the UI or on their site because of the effort of getting people to invest as quickly as possible.
Education is not only lacking, but as you point out in your second sentence, this is by design.
I haven't used Robinhood for quite some time now, but by far my biggest pet peeve (well, more than pet peeve, it was the reason I deleted the app and closed my account) is that graphs had no labeled y axis. A stock price graph with no labeled y axis, and no 0 value, is almost entirely useless. You may be able to tell if your stock went up or down, but not by how much.
But then that is the entire point of Robinhood. Robinhood is a gaming company much more than it is an online brokerage.
A while ago I got a cold call from a recruiter at robinhood. The key metric they used to sell me on how awesome they were was the number of times per day a typical user accessed the app. Straight up engagement metrics like a game.
For anyone that hasn't used it, they literally have a discover tab for options with things like "I think it's staying the same" with the recommendation to create an iron condor and some possible positions you can open [0]. Although they may have changed it as my app only shows learn more now and does not directly show you positions you can open.
Without decent understanding of how options work, even iron condors can turn bad. You are writing options, so you're still running assignment risk or pin risk. It's mostly benign if you know what you are doing but can be a brutal lesson if you just clicked because you think "it's staying the same".
> with the recommendation to create an iron condor
Have you tried? The interface is good if all you want to do is buy or sell a single option. If you try an iron condor, with 4 options, it's difficult to get a picture of what you are doing. Max profit, max loss, greeks for the combined options, etc.
Some other platforms allow you to setup an iron condor with a single click, then move strikes around and see the numbers change.
Heck, even the greeks for a single option are kinda hidden before you buy. Many people don't even know you can see them before buying. It is also difficult to compare greeks between different options.
Spreads in general are not very visible in RH(and are a 'higher level'). It should encourage people to use them more to minimize risk.
It's like 10 clicks to go from seeing the greeks for one option to seeing the greeks for another. You have to go all the way to the page where you're choosing how many contracts to buy/sell before you can click to see them.
Although it's India specific, Zerodha, a Robindhood-like zero brokerage service, has a fantastic app dedicated to finance education called "Varsity". One of the best examples of solid, well-presented content marketing I have seen.
Even for people who know what they are doing the UI is godawful. I've purchased wrong things because when I click something it changed from PUT to CALL. You have to be really careful because things don't seem to stick like you would expect when choosing an option.
We're going to see some really interesting things happen once Robinhood files for IPO and goes public (and options on Robinhood are available for trading for hungry WSB users). I would not put it past them to send Robinhood stock to unimaginable heights (and possibly swallow the entire market in a black hole in the process). Unlikely, but again this is 2020...
With the obscene amount of speculation going on their platform and the losses that are likely to follow - the irony of the name Robinhood will not be lost on the historians of financial markets. Devil take the hindmost.
It’s surprising to see that Robinhood doesn’t have an Roth IRA account offering. It seems like it would be a good thing to nudge the new generation of investors towards.
I personally enjoyed most of my experience with Robinhood.
I used them for ~3 years but was recently forced to move to an alternative when it became clear that maintaining any sizable margin account with them was going to become cost prohibitive. The 5% APY they are charging is a slap to the face when you start discovering rates between 1-2% elsewhere. I also wanted a brokerage that could service IRA accounts and other more complex items.
One area where Robinhood could have improved for me (not related directly to the market) is in their web interface. I noticed performance issues when trying to review history and other large data sets, regardless of browser vendor. On a few occasions I was forced to switch to my mobile app in order to verify a transaction. It feels like they just need to rewrite this thing to be server rendered. There's absolutely no reason I need 5+ megabytes of javascript framework on my client in order to display a 4 column table of basic financial figures.
My first foray into buying stocks in the U.S. was with Robinhood, nothing about the app screamed "gamble away your hard earned money" or "make poor financial decisions" so I'm baffled how people label it as some kind of stock casino and absolve people of personal responsibility, but that's just me..YMMV
My investing strategy has always been to just allocate a certain amount of money per pay period to high growth mutual funds through a Morningstar 5-star rated fund. I wonder what I'm missing out on with things like this.
Sounds like another SoftBank deal. Private Equity capturing all the equity, only for it to be dumped on the public market and have its value decline precipitously.
Etrade's market cap: $11.8 billion. Charles Schwab: $44.66 billion.
1. It has a massive userbase that most likely doesn't have exposure to the larger financial world
2. They have a large enough user base, where they can route orders through dark pools and HFTs. It's good for the user because contracts have a narrower spread and they can give the user the price they saw when they sold it (vs Schwab, which gives you direct access to the market so you need to set limits)
3kinda. Their App is quite good compared to Schwab.
I'm not sure if either 1 or 2 makes them worth 12 billion, but they did get me free trades on Schwab which was nice.
The Uk example you’ve given is terrible. Trade execution at the quotes given (that last 30 seconds) improved. In the uk quoting is done by an RSP but It doesn’t mean the price the customer got in the end improved looking at the main board or dark pools (which you can’t see). They mention it in the conclusion of the PDF.
What it implies is price changes with payment for order flow the order won’t executed and is requoted, whereas where it’s banned there’s no incentive to cancel so you get the quote.
Sure. The trading is done in lower volume assets like non S&P 500 and Options market. This is actually the orders where Robinhood gets most of its money. Say you put up trades and stop loss and trailing stop loss. These orders are sent to and purchased by Robinhoods customers (Citadel and Virtu). Citadel and Virtu act like dealers. They take the opposite side of your trade and also know where your stop losses are. Because these are lower volume stocks, they can push prices around, force you to sell at a loss and then prices go back to where they were a few moments ago.
This happens all the time in forex markets. During lower volume periods, they go after the stop losses. Only market where this doesn't really happen is futures because all trades occur on a centralized exchange.
My recommendation switch to a broker like Tradestation and route your trades through the IEX exchange to avoid getting duped.
Customer orders are tagged in the market (thus available to all participants) due to laws governing market participant behavior. These orders are essentially static, while all other institutional orders with direct market access are fluid. Customer orders are profitable in aggregate in the same way playing professional poker is profitable: a constant stream of less equipped/informed money.
>This is good for them because they might be able to get TLSA at $1599.20 and sell it to the User at $1599.84, and it's good for the user because contracts have a narrower spread and they can give the user the price they saw when they sold it (vs Schwab, which gives you direct access to the market so you need to set limits)
This is not quite accurate. The user doesn't get a better price from a dark pool than they would in the market. They get filled at the market price. It's illegal for it to be higher and Citadel/Robinhood aren't going to leave money on the table by filling it cheaper.
Citadel is willing to pay Robinhood for their order flow because it is less risky and therefore more profitable because Citadel won't end up on the wrong side of a trade. Robinhood uses this money to fund their business and takes any excess as profit.
> The user doesn't get a better price from a dark pool than they would in the market
This is sort of true and sort of not. For an individual trader, it's mostly true.
The law says orders should execute at no worse than the national best bid or offer (NBBO). The NBBO is the best marketed bid and marketed offer. It does not include orders on a dark pool.
A trade executed at NBBO and filled at a better price in a dark pool is perfectly legal and somewhat commonplace. This is what Citadel et al do.
> Client orders are protected in this scenario by FINRA Rule 5320
That’s front running. It is illegal.
Market making is done at risk. Citadel fills the client’s order at the NBBO out of its own book. It then turns around and sells stock at the best price it can find, which it hopes will be better than NBBO. (It may not!) This is market making and it’s quite legal.
But Schwab actually runs a bunch of funds that people invest in, as well as a bunch of other sources of income besides market trades. Hard to imagine that Robinhood is even on the same order of magnitude as someone like Schwab.
It seems like people have very short memories with this company. This is the same platform that crashed hard for multiple days back when stocks took a dive in March 2020[1]. This is also the same company that opened a savings account with 3% interest that they had to back out of as they were claiming it was SIPC insured, it wasn't[2]. Basically as the timeless saying goes "Caveat emptor".
Until Robinhood came along I thought transaction fee was how brokerages make money. It really was a surprise to me when these guys made it zero. I still don't understand how they make money though.
On a different note, I don't think they are in anyway different from the other brokerages, the only reason these guys became popular is because of the zero transaction fee trick. It was a good one but there might not be more tricks left for new entrants. The software is written from scratch in 2018/19 so obviously it will take the shape of that time, nothing great about that.
Might be an unpopular opinion but I think RH is great for financially literate retail users. Zero commission especially on options is incredible. They need to work on trading workflow or at least have an alternative for experienced users.
Think they'll do well...but I really don't want my money anywhere near them - as investor or investee. Move fast & break things isn't the way to go in large scale finance. The debacle about their service being down during key moments proved that pretty conclusively
To be fair, TD Ameritrade is just as bad. TD Ameritrade and TD clearing combined have 606 reports slightly worse than Robinhood.
Its amazing what you can learn from looking at other countries that are specialists in an industry. For example, Tesla, hydrogen fuel cells, and Japan but that is a story for another day.
You don't need to sell order flow to make money when people are letting you hold their billions. Trading 212 already offer commission-free trading in the UK.
I hope you don't want to play the "hydrogen fuel is the way to go, look at japan" card. There are very good reasons for japan to invest in hydrogen that are not applicable to the rest of the world.
No, the primary reason is limited access to the energy market and limited resources on their island and that they're an island. And there is China. Hydrogen is a wonderful alternative if you don't have alternatives. But its awful if you have plenty, like the rest of the world.
Not true. Panasonic is a Japanese battery manufacturer that Tesla is a customer of. Japan carmakers aren't going for batteries despite having local capabilities. Instead they want to go for natural gas based hydrogen fuel. South Korea also.
I don't know enough about Japanese law to know either way, but measuring needs, capabilities, and/or national strategy by observing the things that companies are doing is often a bad yardstick.
At best, this is twice removed from the facts at hand. [future capabilities and limitations exist] > [they're interpreted by legislators who design regulations and subsidies] > [automakers build whatever makes them money]
If look at the US automotive market, you might conclude that automakers have found the best way to decrease emissions is by making cars larger. This clearly isn't the case, this is simply what the regulations have encouraged companies to do.
Large companies are politically connected. The car manufacturers represent a large amount of exports and are politically connected. The politicians and lawyers aren't making decisions on their own. The car companies bring their engineering and science expertise to the table when crafting national policy.
Yes, and they do that with the interest of making money, not with the interest of ensuring national energy/resource security.
They're not building hydrogen vehicles out of some long-term concern about resource availability. Note how those same automakers don't sell those vehicles in the rest of the world, even though they're on the same planet with the same amount of cobalt.
Japanese automakers are building hydrogen vehicles because 1) they are being subsidized, and 2) they get a seat at the table to influence regulators.
Mirai has begun selling in California and its even more than the Model 3. It is definitely not subsidized. However, the price between model 3 and the Mirai make me wonder. I don't understand the science fully and I know most people don't know either except for the physicists. I don't trust Elon and batteries could be a short term thing.
Ah, looks like it has -- last time I checked I thought you could only get one on lease. Honda's FCX Clarity is still limited production and lease-only.
But yes, the Mirai and the fueling stations are definitely subsidized, both in Japan and in California.
Yep. They give you $15,000 fueling credit for 3 years but this is definitely a forward deposit for building out infrastructure. If you subtract the $15,000, the Mirai 2020 is within acceptable price range of the Model 3.
I am not the most scientific person but I don't like Elon Musk's history and that he didn't address the science properly. Elon Musk bought Tesla and scrubbed the founder's name because it makes it better for storytelling purposes. When mentioned fuel cell vehicles, he called it Fool Cells and wrongly brought up a 2 step process. Theatrics and logically true but wrongly used. I am familiar with these techniques used by bullshitters.
Google "wind power max efficiency". They knew the max capabilities of wind power in 1919. In other words, even if they improved the wind mill or turbines or the materials they are made from, they knew the upper limits or max value of this renewable wind power.
I believe the physicists that work for the Japanese and Korean car makers are aware of the limitations of battery power and have already mapped out its trajectory. With that knowledge, they have still decided for hydrogen power.
> they knew the upper limits or max value of this renewable wind power.
We also know the upper limits for solar. And for the current battery tech. And solid state battery tech. And the theoretical max for any battery that still follows the laws of physics as we know them. Your point being?
Hydrogen makes very little sense. Or rather, it only makes sense to keep the demand for fossil fuels high - because this is the cheapest way to get hydrogen (see natural gas reforming). Electrolysis is inefficient and expensive.
Not to mention the infrastructure required to compress/liquefy, ship, and building refueling stations.
All that for what? To feed it to a fuel cell and get electricity back. Just use the electricity to charge a battery and skip all the middle men.
If you have electricity, you are better off using batteries. The energy grid will likely be available close to you, transportation is taken care of. At the end of their useful lives, batteries can be recycled and we get most of the material back.
Due to hydrogen embrittlement, hydrogen tanks also have a shelf life.
This has little to do with physics and more to do with incentives from the fossil fuel industry.
That is Elon's talking point. He isn't a technical person. He bought Tesla and scrubbed the founder's name for business storytelling purposes. So natural gas produces hydrogen, this hydrogen is stored in a tank, and then converted to electric when it is used. There is no 2 step process but Elon dismissed this technology for this reason. I don't trust this guy. There is nothing he knows that the Japanese carmakers don't. I am only suspicious that the Model 3 is cheaper than the Mirai. It might be a short term play that I don't fully understand in the same way I don't understand have Citadel and Virtu make money from buying trades. However, I think they are up to no good.
If they had been advertising about how low their fees are, and how you can invest your savings in ETFs or something I would have no problem with it since that is a reasonable thing to do. But suggesting that the average low income person should be day trading is just predatory.
I even saw an ad (not 100% sure if it was Robinhood but a similar product) that was telling a story about how someone was in tens of thousands of dollars in debt, and day traded until they were out of debt. All these trading apps seem to be targeted at people who will almost certainly lose money, and who generally don't have much to lose. I mean I have no problem with an app advertising an easy way to do day trading, just don't act as if it is anything other than gambling.