Some politicians are criticizing Robinhood (the stock trading app)

[WarGamer]

That's in the news today because of their IPO.

Just wanted to clarify a few things as a user.

I've had a Schwab account for decades. That's where my retirement funds grow and hopefully prosper in the future.

Schwab is a desktop interface, not made for active trading. It's slow and cumbersome and transferring money from a funding account takes a long time.

Robinhood came along and gave the "average Joe" the ability to trade stocks and options the way the "big boys" do and guess what... the big boys are complaining to their politicians.

They claim it "gamifies" trading. It does not. The screen is solid black or white with letters and numbers on it. No explosions or video game stunts.

There are MILLIONS of "retail users" getting into the market for the very first time. Robinhood and WeBull and a few others put the power and responsibility in the hands of the people.

Wanna know WHY the politicians are speaking up against Robinhood?

https://www.vox.com/recode/2021/2/2/22261097/gamestop-wallstreetbets-short-seller-hedge-funds-losses-robinhood

Redditors wanted to take down short sellers. They’ve certainly hurt them.

"So far this year, investors who’ve taken a short position on meme stocks, whose unlikely rally has retail investors flooding Wall Street and terrorizing hedge funds, have lost billions. Short sellers lost nearly $13 billion on GameStop alone so far this year, according to financial analytics company S3 Partners, which shared data through market close Monday. While that’s certainly a lot, it’s down from the $26 billion they were down last Wednesday, when the stock price closed at a record high of $347."

https://franknez.com/citadel-loses-billions-hedge-funds-are-getting-dragged-down/

Citadel is one of the largest hedge fund managers in the world. And they’ve subsequently managed Melvin Capital to the ground. Melvin Capital suffered a loss of over 50% its first quarter in 2021 due to shorting AMC Entertainment and GameStop.



When you hear someone criticizing Robinhood and Retail Traders... they're defending Hedge Funds.

[Best_man23]

1. The Hedgies are Getting Happy Feet

Because when IQ45 was in the Oval Office, many of them likely went back to the trading practices they were employing in 2007-2008, which included Naked Short Selling. I'm sure Citadel's short positions included some Naked Shorts, which they probably got caught failing to cover.

Naked short selling, or naked shorting, is the practice of short-selling a tradable asset of any kind without first borrowing the asset from someone else or ensuring that it can be borrowed.

Also the big uptick in AMC over the last 3 months really squeezed them. Unfortunately, I think they and other HFs are going to take it out on Robinhood one way or the other once those shares are opened to options trading.

[ProfessorGAC]

2. It Seems Fine To Me

It allows small investors to do some savings, with some return.
Banks haven't been providing useful yields for 20+ years.
Putting small bits of money into retail sites, as part of a budget, encourages savings.
99.9% of those savings will eventually be recycled into the economy, plus the accrued yield.
To me, ignoring the lack of insured investment, is little different than my wife & I having a timed bank account paying 4.5% in the 80s. The down payment on our house came from that account.
With bank accounts paying an average of 0.06%, these retailers encourage saving, because the return is more tangible.