To pile on to my probably unpopular thoughts about Bitcoin last week, let me tell you my top three reasons I don’t like Robinhood (the trading app, not the 1973 Disney movie which is one of my all-time favorites).
- Robinhood purports to make investing in stocks available to the masses, but frankly, that was already the case through discount brokerages like Fidelity and E-Trade. What Robinhood is really making available is another form of gambling, no better than FanDuel or Draft Kings.
- Think Robinhood is all about doing good for the investor? Think again! Those “free trades” are still making Robinhood money from fees the exchanges pay to the middleman. So, Robinhood creates an app with confetti every time you trade, a chat board that makes it cool to lose money, and constant reminders (ala Snap Chat) to keep you on the app, moving money around. Like a casino, they don’t care if you win or lose as long as you keep playing.
- Is it all fun and games as long as “real investors” don’t get hurt? I beg to differ. A generation of young people who get burned on the Robinhood app will be harder to convince to get into their 401(k)s or other more legitimate long-term investments. I’ve seen it from people who are still sitting in cash after the 2008 crash. People will do anything to avoid the feeling of a loss once they’ve been hurt. A new generation afraid to make long term investments is not good for anybody.
Hopefully what comes of the Reddit-GameStop-AMC-RoaringKitty debacle is more regulation of “investing” platforms that do more harm than good.