Is this actually a "valley" though? I'm not sure about that. It could be the worst of this recession is yet to come for both types of assets.
Buying at the bottom is a great idea, but the hard part is knowing where the bottom actually is.
Robinhood was not optimised for investors. It was built to resemble a slot machine.
Half the people in this Robinhood cohort are writing weekly leveraged (non-cash secured) puts and/or put spreads or long calls. With that popular strategy, one big market move and you're wiped out.
I doubt its the tech layoffs that did it. Maybe the cost of leaving exploding led to less disposable income meaning less people willing to gamble. Also why risk your money when everything seems to be going under?
Compare that to EPS and Net revenue of Boeings third quarter results and forward guidance.
While Robinhood used to pay a competitive interest rate for cash in the account, it is now 1.5% while Fed risk-free rate is now 3.75%+. You need to pay for Gold subscription to access the decent interest rate.
Square/Block/Cash App also just announced a huge boost in profitability.
While it wasn't feasible in the last years of zero interest, now, digital wallets are profiting off the difference of giving you 0 - 1.5% interest of your sitting cash while they pocket 3.75%+.
1-3 month CDs are 3.9%
I do not do any heavy day trading, but I do like to buy a few shares of things throughout the day, every day.
As a consequence, the user experience in mobile form factor is a big aspect for me. I understand for any professional in the space, this is perceived as lunacy. I am no professional.
Once IRA support is added, I'll be locked in for life. I don't understand how someone can use the fidelity or IBKR mobile apps and think "yes this is all ok" after spending 5 minutes in the RH app.
I don't think this is a knock against RH more a description of what's happening in main-street.
This is a fundamental question.
How can you trust any company that has you as the product?
Can anyone name a better one?
RH made it's money through pfof and capturing COVID relief checks.Their brilliant corner in the market was a frontend app so easy to use that you wouldn't even think about the money you're losing. Since RH's release, most brokers offer similar (if not equal) platform usability and RH's lunch has been completely eaten. I would be surprised if it survived a few more years before either going under or being cannibalized by actual brokers.
As that's no longer applicable for me, I find more and more reason to move all my accounts to Interactive Brokers. The entire history of their nickel-and-diming fees was easily paid for by letting me enter a single position one day in 4AM-7AM pre-market trading hours, which those other basic brokers (including IBKR Lite) don't support.
RH's health is fine. They are still getting positive net deposits, and they're still adding features. It's a great business to be in. They have insanely high margins and their customers' default behavior is to put more money into them. Once they have IRAs, there won't be a good reason for normal investors who just bag-hold stocks to switch away. They have $6 billion of cash, which gives them a ton of runway.
I can't read the article, but you define "monthly active users" as a user exiting the platform i.e. pulling their money out?!
Originally, I had assumed it was "users who don't open the app/website" but expectation difference caused me to look it up:
> Robinhood defines a monthly active user as a "unique user who makes a debit card transaction, or who transitions between two different screens on a mobile device or loads a page in a web browser while logged into their account, at any point during the relevant month. A user need not satisfy these conditions on a recurring monthly basis or have a Funded Account to be included in MAU." [0]
I have a Vanguard, I haven't opened it in a month. By the above MAU definition, Vanguard lost me too.
Again, this _alone_ doesn't tell us that RH is doing poorly vs other Retail Brokers. They could be, but not enough info.
My take is - most people don't want to see their ultra red portfolio and are just not opening the app.
[0] https://www.fool.com/investing/2022/05/09/robinhood-losing-m...
The strategy worked for the recent years but these investors probably will be the first ones to jump off the boat when things start looking bad.
The headline feature for RH is "fee-free trading" which is fine, but once you read past the headline you'll come upon a vast amount of gamification, calls to action, and every other tool borrowed from gacha games and gambling generally.
In that vein I would expect their corporate performance to track more closely with gambling and F2P gaming peers than they would track more established stock trading apps.
More cynically RH's product was making people feel like geniuses in a bull market. The bull market is now gone.
Vanguard pioneered the low cost index fund and Schwab was one of the original "discount brokers". Their innovations were adopted by every other broker, driving down costs for the small trader. They remain allies of small investors.
Schwab/TD Ameritrade on the other hand, has kinda bad ETFs but have really good customer service. Besides, you can buy Vanguard ETFs / Mutual Funds in your Schwab account.
Go for customer service. There's some minor benefits in terms of how quickly you can enter / exit Vanguard positions if you get a Vanguard account, but overall its a better idea IMO to get a brokerage account with humans on the telephone whenever issues come up.
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I'm also in E-Trade and they've worked out so far for me.
The one I'm most interested in is probably Fidelity? Good overall reviews, apparently pretty good customer service, and the ETFs / Mutual Funds / Bonds they offer seem pretty good too.
TWS (their desktop app) has many options and target pros. However, I haven't used their web/phone apps.
> If Robinhood had to close shop
I doubt that will happen. Citadel will jump in and inject money, just like they did with Plotkin's Melvin Capital.
To add some numbers: they're burning $175/quarter, which includes severance payouts from their recent layoff, on $6954 of assets, which includes a $6187 pile of cash. So that's 8.8 years of runway if they didn't cut costs or grow revenue further.
And their product also has a ton of room to improve -- once it gets IRAs, that would remove the main reason its more boring customers find other brokers.
I just pile leftover savings into Small-Cap Value funds though, so my needs are rather minimal.
Vanguard, Fidelity, Schwab, TD Ameritrade (while they are still separate-ish) all have different pros and cons.
What do you need?
But I shouldn’t be trading so look at Fidelity.
Fidelity has been good to me.
You could cry you don't like their prices or you think another broker offers better transaction costs, features, or fees, but talking about "trust" is a baseless smear.
https://robinhood.com/support/articles/2G77XtQsBQxJ9ofzqgJhA...
Which is surprisingly hard to pull off long term as most people are forced to take money out when they run into financial issues which then correlates with down markets.
From FY21 10-K filing[1] p. 74, cryptocurrencies represented 23% of total net revenues, or 29.9% of total transaction-based revenues.
[1] https://www.sec.gov/Archives/edgar/data/1783879/000178387922...
Edit: It's already here.
https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
So I phoned in, spent a half-hour with a human being. He was audibly cursing as he tried to get me set up. At one point, after I had given him my name and other PII, he addressed by a different first name then quickly corrected himself.
At the end, he said, "Ok, now you'll get an email to finish setting up your account." Email arrived and it was addressed to someone with a different name. I recognized the first name as the same name the agent had mistakenly used with me.
Suffice to say, I did not finish setting up my account and decided to stick with Fidelity.
Plus, I have my own story about Robinhood - they couldn't or wouldn't change my email address. I think they expect users to upload pictures of ID and such.
That's crazy and completely disqualifies them for anything serious, for me.
If something is really important, then you do it in person, with a local representative or notary or something.
If it's not that important, then they don't need ID theft material in digital format. They already leaked the info they have!
It is not a feature to have the ability to make critical changes without friction from anywhere in the world over the internet, with the right bitstream. It's completely unacceptable.
My entire relationship with Robinhood involves a trivial amount of crypto that I don't trade, on the assumption they are the (one of the) most government compliant or least shady ways to hold that. That is based on my outlook being the complete opposite of the cliché "not your keys, not your coins".
Other than my "free stock" I don't own any non-crypto and never will.
Confirming my negative attitude was their recent data breach, which we will never know for sure the scope of, but I suddenly started getting investment scam spam from known scofflaws at the email address Robinhood has and probably leaked.
The SEC has a "catch and release" program for even small-timers; it sure is a disincentive to report criminal activity when you see in the public record someone already was caught and paid a fine and kept right on keeping on.
If you have a balance of $1, wouldn’t you be counted as an active user ?
It sounds to me that an active user is someone with funds or that interacted with the app/website while logged in. I’m not sure the second category made much sense to begin with (unless you wanted to inflate the numbers during a bull run)
No metric is perfect nor stands alone. What does it mean in context to RH, FB, Apple? The value of a MAU is relative. The key is it's well defined, stable and trackable over time. Assigning value is up to diligence at that point.
You may have funded the account last year and did nothing with it. My understanding is you would still count as an MAU even if you didn’t interact with RH.
It's as if not everyone can be rich with this one simple trick of dumping your hard earned cash into buying whatever Blackrock is dumping on you every month till eternity.
> buying whatever Blackrock is dumping
The amount of money it would take to move the price of the S&P 500 is incredible.
I think even if 99% of the purchases went to zero, you'd probably still be ahead if you're diversified properly.
It starts out with "A user need _not_ satisfy". They're saying funding has nothing to do with MAU. The language is pretty clear - "while logged into their account, at any point during the relevant month".
If you don't like it, I get it, but you've offered nothing than "I say they're shady!"
Actually Bitcoin and Ethereum have a known supply and limited inflation (Ethereum is actually deflationary now) so best suited to not go to zero. The USD on the other hand…
Plus, for the value to completely zero out you'd need lots of large organizations who have lots of money (be it ones who've borrowed it or ones who are 'holding' it for others) to not only run out of said money but also be unable to pull in new people with get-rich-quick schemes. Miners and stakers would also need to completely lose trust in cryptocurrency.
So, to zero it out, you would need a global economic crisis so large that it educates pretty much every 'sucker' out there, which is pretty unlikely to happen right now.
How much are Pan Am, Enron, Lehman Brothers worth today?
The utility of Bitcoin is its global payment network.
Yes. I was trying to be generous.
Most of it isnt index. They are popular names, meme names, volatile stocks, and YOLOs
See the bit about the "floor" in your post.
Ordinary crypto currencies like BTC & ETH can't go bankrupt. They never had any liabilities to begin with. The majors such as BTC & ETH have deep, global, 24/7 liquidity. If you can find a way to make all the liquidity pools dry up for crypto around the world, I suppose it will go to zero. Good luck with that.
So zero then?
Bitcoin, on the other hand, is some electricity, and arguably a waste of it.
/happy gilmore
There is no floor for stocks.
