I think the bigger problem is the erosion of the distinction between "investor" and "speculator", which is often unclear for novices entering the market (for whom Robinhood is significantly lowering the barrier for). Robinhood provides the firing range and a gun but no safety instructions.

So I'm willing to bet you view this app very differently than someone who finds it on the App Store in a spur of the moment enticed-by-Wall-Street feeling, where it can be mistakenly thought as a get-rich-quick scheme. There's no education component to Robinhood

(This conflation between speculator/investor has been happening for a while, see "The Intelligent Investor" by Benjamin Graham.)

But even if you pay the $9-$15 for their Gold account, you still can only get on margin the amount of capital you have in the account max ie: if you deposit $5 and have $5 of cash on hand in your robinhood, but own ~$1200 of stocks, you can use < $1200 of "Gold" which is what they call margin money. It is explained quite well here:

https://support.robinhood.com/hc/en-us/articles/213262686-Ro...

Note that I am a robinhood user and do not use gold or any margin investing. I use it for speculation for long term stuff and have the rest in boring index ETFs / funds primarily. I think the entire idea of investing on margin as playing with fire when you lack fireproof gloves.

Investing or trading on margin is intended to allow you to trade while you are waiting for previous trades to settle. It's not meant to be a loan, but it is exploited that way by both banks and traders at their own risk. It's simple enough to fix, only allow margin to cover the amount of money waiting to be settled. In other words if a trade hasn't settled then the funds are not available for trading.

Margin can be powerful as a wealth building strategy, when interest rates are low. Risky? Yes. Profitable? Sometimes, if you've done your homework.

I don't think you can be a consistent good stock picker, HOWEVER, there are certain companies you just know will do well because they're closely aligned to the industry you work in, for example. "Doubling down" using margin (borrowed at 1-2% per year, not 8-10%) can (maybe, sometimes, not always) be a good strategy.

If you can borrow at 1-2% a year, it's almost a no-brainer.

I've not heard this history before, is there a source you can point to? I'm interested in the history of financial instruments.

As the old saying goes, in the morning two kind of people enter the market. One with money, the other with experience. By evening they exchange positions.

What are returns like on "boring index-tracking ETFs"?

Long term (10+ year) returns have historically been around 7%. Obviously that can vary quite a bit year-to-year.

Ask Jack Bogle... I'm sure he'll have a lesson or 5 for you.

If someone is unfamiliar with the return on index funds they are unlikely to know who Jack Bogle is or what his lessons are.

I got here: http://johncbogle.com/wordpress/

But I'm not sure where to go to find information about the returns.

That's John Bogle. You're looking for Jack Bogle. https://www.bogleheads.org/wiki/Bogleheads%C2%AE_investment_...

Apparently, they're the same person. https://www.bogleheads.org/wiki/John_Bogle

> John C. (Jack) Bogle, after whom the Bogleheads® are named, is founder of the Vanguard Group and creator of the world's first retail index mutual fund.

What's the lesson?

Index funds (over time) tend to beat most professional money managers, much less amateur speculators.

It's worse than that. Over any period of time index funds beat the average actively invested money because they have the exact same returns and less fees:

https://web.stanford.edu/~wfsharpe/art/active/active.htm

Less fees and transaction costs.

A historical returns of the stock market calculator: http://www.moneychimp.com/features/market_cagr.htm

Yes, index funds are less risky than undiversified individual assets but they can me much worse than boring.

Depending on the index you track, it can fall 80%. Consider the Asia ETFs in 2008, brutal.