Not having capital isn't the same as being unsophisticated. I could do all the right research on which stock I want to buy, but if I only have $100 to invest at the end of every month $10 fees would dig into my earnings very quickly.
Assuming that people without large amounts to invest are stupid says more about you than it does them.
EDIT: you also don't need to spend $100 for 20 years of stock data. Plenty of services, such as Quantiacs/Quantopian/QuantConnect allow you to test your strategy against historical data for free.
I agree with your point that buy and hold can be a valid strategy, I just don't think that example is fair and Buffett it basically a meme in these threads now.
I think you may have misinterpreted the OP's point about sophistication - I don't think he was trying to be condescending to those with comparatively little to trade with. His actual point is valid - if you are optimizing for commissions first and foremost, you're probably doing something wrong (as an active trader). Robinhood is a platform that, by design and mission, differentiates itself on the lack of commissions, not on superlative features or strategy availability. This means that if you choose Robinhood as your platform for trading (as opposed to, say, Interactive Brokers), you're likely optimizing on commission/fee avoidance, because that's all they're really got to offer that's unique.
Commission and fee avoidance is great, sure, but optimize for that within the context of a larger strategy. It's very important to reduce fees because it can make an otherwise unprofitable strategy profitable, I agree! But you should really start by getting to the actual strategy first, and Robinhood's business directive might encourage potential investors to prematurely optimize on fees, when that is honestly not the thing that typically prevents people from being successful in the market. The thing that typically prevents people from doing well is the lack of real alpha.
If you do have a viable trading strategy with a good Sharpe ratio, the commissions will not stop you from being successful. Conversely (as one example), if you are using the commission-free trading as a way to explore strategies that you think are viable, but which are actually just risk-overloaded returns attributable to chance in disguise, then yes the commissions will eat you alive - but that's because you don't really have a working strategy in place.
Except in the regulatory framework we live in worldwide.
The second to last paragraph seems to me to be quite dangerous. I'd wager it is quite likely a person would see a pattern that really isn't there.
At least, it's worked reasonably well for me for the last 20 years.
No one advocating buy-and-hold recommends buying one thing.
My back tests and analysis are showing that I am not OK with buy and hold, because I don't want to stomach 50% draw downs or to wait 15 years for the NASDAQ to bounce back...
I am not that risk tolerant and I might need to sell some of my investments for medical, travel, even early retirement...
That's why I like to buy when the market goes up and sell when it goes down and be cash during crises like the dot com bubble and 2008 financial crisis... you can always buy them back on the way up when the trend changes...
Everything else is smoke and mirrors and unicorns...
There is no way you can turn $1000 into anything significant without insider trading information...
All of this marketing around the miracle of investing small amounts (if you invested $100 into the market 20 years ago it'd be worth $1M today!) is just that, marketing. It's a way for brokerages and mutual fund salesmen to get more people into the game.
The brutal reality is that you need at LEAST $10K to ever see an appreciable return from the market. Investing $500 is a waste of your time unless you go into it with the understanding that:
A) You might make $50 a year from it
B) You're going to make an effort to actually learn about the stock market, fundamental analysis, etc with the aim of better knowing what you're doing when you have a bigger bankroll to invest.
Do you have personal experience buying data from ebay? Why would you do that?
http://www.ebay.com/usr/artinvest389
I did test random samples from the data against other data providers and I am using it every day an yet to find errors or mistakes...
Sounds like fun for those that like technical analysis.
Use your imagination, with data like this you can test value investing, arbitrage, trend following...
For any type of investing test you'll need to know the price of the security on any given date in the last 20 years...
Your comment is very perplexing in content and tone.
That said, I think I might not have conveyed my original question well enough - what I actually meant was 1) is the data accurate? (you sort of answered this by saying you compare it to presumably licensed sources) and 2) what actually led you to searching for financial data on ebay? (you didn't answer this, other than "it's cheap").
I'm basically wondering how you did the mental calculus that concluded ebay was a good place to check before you verified the data was alright.
If it was not, I would have notify the seller, eBay and PayPal and get my money back...
Before this data, I was using Quntopian, but the huge limitation there is that you cannot test on the whole market, you cannot download their data, etc...
Anyway, I am trying to give an honest advice here and to prevent people of losing money because they don't know what they are doing...
I think it is very noble of you to weigh your needs against the needs of others. Charity and how you should exercise it is a very interesting subject, and there are many many ways to do it optimally. See Givewell, Watsi, Mindsmatter etc. Since you are reading this, I assume you are doing reasonably well in life, so, and this is my personal view btw, you do need to give something back to those in need. However, don't let that prevent you from investing in your own education - it will very likely enable you to do more.
Irrelevant, because for someone who knows what they are doing in the stock market paying $10 or $0 per trade is not going to save them any money.
Dangerous, because it promotes more trades for the “unsophisticated” investor and encourages leverage = very dangerous situation.
Bottom line, if you do not know what you are doing, don’t do it, buy and hold is not a strategy and sooner or later will leave you very disappointed, especially if you are leveraged on top of that. Just ask the investors in the Japan asset price bubble when they’ll see the top again – looks like never in their life time...
To be able to invest successfully you need to spend the time and educate yourself like in any other profession or hobby and the first step is to go to eBay and search for historical stock market data, you can buy 20 years of data for less than $100 and you can test all your ideas for free and without losing a single penny...
Good luck!