People say I don't criticise regulated businesses enough, so let me talk about Robinhood is planning an IPO soon and which I think is an absolute menace to society.
This app is rewiring an entire generation's investing habits to engage in out-right gambling by pushing users into crazy risky products that 20 somethings have no rational business buying.
Encouraging intraday trading by pushing constant notifications at them about short-term price movements is a cash cow for them because they profit per transaction, but not in the interest of their users.
Frequency of trades is almost always inversely correlated with returns.
Frequency of trades is almost always inversely correlated with returns.
Encouraging users to buy options contracts is even crazier. 60-65% of these contracts are going to expire worthless and most Robinhood users aren't trading these products as part of a hedging strategy but instead as naked gambling. It's like a casino parlor.
In their S-1 filing 34% of their cryptocurrency revenue was attributed to transactions fees on Dogecoin. A absurd financial product that is to first approximation a distributed Ponzi scheme backed by nothing but jokes.
vice.com/en/article/xgx…
vice.com/en/article/xgx…
Although their entire crypto business is actually more honest than the rest of the sector. Since it doesn't allow withdrawals or transfers of cryptocoins, it abandons any pretense of bullshit "digital money" and presents users with the crypto slot machine they actually want.
And that cuts to the heart of why it's a terrible business. It's not about democratising access to the markets at all. It's about putting the same fruit machine you see in seedy bars into every teenager's pocket and addicting to them to high-risk gambling behavior like a dealer.
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