Robinhood is another stock trading startup backed with heavy venture money. CNN Money states “Robinhood wants to eliminate those commissions and make trading as easy as ordering a car on Uber or Lyft.” great… just what this economy needs.
Lowering the barriers to trading brings in more cheap, and dumb money. Build an App with zero minimums and zero fees to trade and you are inviting people who shouldn’t be in the game to dive right in over their heads. Robinhood is still in Beta, they are bringing new customers in slowly, here is a review from one such investor on Reddit:
You’ll note the highlighting I hope.. this person has less than $2000 in his bank account, and yet is ready to kick off with a $1000 trading account. Robinhood’s marketing copy describes such people as ‘investors’, per below.
But I hope that you will see the real investors are listed below, the venture firms who are going to clean up from all the dumb money that comes into the market. That they plan to make money from their clients who not only can’t afford to trade, but need to borrow to facilitate it is quite sickening. Yet another firm out there to take advantage of the lack of financial education out there, and keep another generation in debt.
A huge opportunity indeed, and I am sure that the guys at Robinhood are going to do very well for themselves. For the people out there who think they are the next Gordon Gekko, I recommend you get yourself a cat instead, it’s cheaper, and you can upload videos of it to YouTube.