Full disclosure, I've been using Robinhood, for a several years, to buy small amounts of stocks or ETFs I want, with limit orders, when volatility drives the price down. Everything I buy I intend to hold for a *long time.

And I really appreciate that they offer low fees, in % terms, on small orders. So it allows me to gain experience as an investor, not trader.

In March, people were speculating a world-wide depression due to the pandemic and hoarding toiletries. People who saw it as free money were, uh, incredibly optimistic.

I bought it at around 20 dollars a share. This was the riskiest stock I purchased as it was theoretically possible they'd completely dissolve. But, at 20 dollars a share Delta should eventually go back up to 60. It might take 10 years for Delta to get back to 40 but it'd still be profit.

Anyone trading on a time scale of less than a few years is basically always optimistic. Buy and hold is generally the safest strategy. And the famous quote is timing in market beats timing into the market. In March you were able to effectively get on both trains simultaneously.

While you might have done that kind of research, the article implies (correctly, in my view) that the typical Robinhood user did not. No surprise; that sort of research is time consuming and requires significant familiarity with the industry. Yet airlines, cruise companies, and other risky assets were preferred by Robinhood users throughout the pandemic.

[1] https://en.wikipedia.org/wiki/List_of_airline_bankruptcies_i.... These lists omit airlines that get bought up for pennies on the dollar by competitors.

This is exactly the point; be careful of thinking like this. Some of the biggest profits come from being contrarian to the market view.

SK: https://www.reuters.com/article/us-hanjin-shipping-debt/bank...

USA: https://www.nytimes.com/2014/09/30/business/revisiting-the-l...

UK: https://en.wikipedia.org/wiki/Black_Wednesday

Essentially that means there's not any real risk to investing now apart from options or penny stocks. I mean, congrats, we might've eliminated risk, but surely something else has to give to support that.

Now, government bailouts is a different can of worms and I am not entirely sure my opinion on that. Generally I would have to say I am against it, as it doesn't actually favor businesses that can properly adapt to the markets and new blockers. But, things like dropping the fed rate to encourage consumer spending does seem okay to me.

If we removed bailouts then there would be risk involved. And there is still risks involved in stocks. Not all stocks only go up. Nikola is basically a pump and dump scheme that likely wont be around in 3 years to grow with the rest of your portfolio. Plenty of companies seem flash growth and then equalize down to something more reasonable.

However, in general, if you buy diverse stocks and ETFs or index funds you should only see it go UP over 10-20 years. You will have dips, and you can even have a recession. The people most impacted by dips in stocks are people trying to retire during that retraction period.

What you described seems to be like intuition though. Stocks are high, people can't afford them and they cannot see a lot of growth. When stocks drop you can capture more growth potential for cheaper. So it seems like a natural progression that people would buy back into the markets, thus helping the markets stabilize.

This isn't what the word "inflation" means? Besides inflation is not that high now. (Admittedly, it's not as low as we pretend it is...)

I was tired and only half paying attention, but I should have vetted this better before posting it. My bad.

I find it mind boggling that people can still believe so deeply that infinite growth is possible on a finite planet.

Just looking at climate change as one example, in 20 years or so we're looking a serious portion of the planet being uninhabitable. We'll be having trouble producing enough food to feed people. And climate change is just one of the many systemic problems that we're facing.

I find it mind boggling that people still can't believe infinite growth is possible when all it takes is combinatorial explosion from the outputs becoming inputs in new products (CPU -> computers -> AWS -> SAAS -> some app, etc)

> We'll be having trouble producing enough food to feed people.

The 1970s called and they want the Club of Rome limit to growth/Malthusianism back

Combinatorial explosion in production possibilities does not mean anything close to combinatorial expansion in possibilities for growth. It's an increase, but nowhere near factorial.

Here's an example. Imagine that you are a barber shop. What advantage does 10 years of computing advances give you? You might be able to save 15 hours in accounting time and lower appointment friction by 20% over phone calls. The expansion in the productive possibilities linked to tech was combinatorial, but even in a period of ten years it barely improved your business.

The truth is that every frontier has a point of diminishing returns. Your point is that you believe that we can iterate on the value - resources front indefinitely. Well, empirical data just disagrees with you. We're at 2% annual growth on average and slowing down, despite increases in consumption, and even less than that when correcting for population growth.

Yes, Malthiusianism is wrong. You can't equate Malthiusianism with the belief that infinite growth is impossible, that's just a total non-sequitur.

We might still see a lot of economic growth left in the future, but it's clear there will be plateaus and it's clear that we are nearing one.

Growth in power consumption of laptops, is falling.

Growth in total material consumption for say cars will fall too, as less maintenance is required for electrical engine vs internal combustion.

Many people believe we've reached peak oil, as demand will decrease. So it's not so clear.

> The expansion in the productive possibilities linked to tech was combinatorial, but even in a period of ten years it barely improved your business.

If you are focusing on one business, there's little change between barbering now and not just 10 years ago, but even 200 years ago. But small changes are enough - even taking appointments online frees the barber time. So there's some growth.

> The expansion in the productive possibilities linked to tech was combinatorial, but even in a period of ten years it barely improved your business.

However, you are missing the 99% of businesses that are impossible with 1800 technology.

This cause growth, and much more than the little growth seen in barbering.

> The truth is that every frontier has a point of diminishing returns

Diminishing returns are perfectly compatible with asymptotic behavior.

> We might still see a lot of economic growth left in the future, but it's clear there will be plateaus and it's clear that we are nearing one

You don't understand (or you do, but don't want to see it): as long as f(yu) >= f(yt) for yu>yt, there's infinite growth.

It may be less and less, if it's asymptotically going to 0, but it will never reach g=0.

Plateaus are fine - just like recessions. Yes, the economy is not strictly increasing with a time granularity that too small. But group years by pack of 20, do a moving average and you'll see a strictly increasing function. g>0 which means infinite growth is possible, even if g may not be to your liking.

Perfect? No. Good enough? Yes!

It's worth two minutes of reading

I'm used to downvotes here since facts are not popular (bitcoin ...)

The "infinite growth in a finite world" is a traditional line from the school of thought this Club of Rome started.

However, as you correctly found out in the wikipedia article, it's dubious at best "the forecasts of the world's future are very sensitive to a few unduly pessimistic key assumptions. The Sussex scientists also claim that the Meadows et al. methods, data, and predictions are faulty, that their world models (and their Malthusian bias) do not accurately reflect reality"

I gave a very simple example (combinatorial explosion) that shows how the whole thing is wrong, and why (here, attacking a key assumption) - but there are many many more holes.

It's not really redeemable, after having been proved wrong more than wrong - just like Malthusianism actually.

> It's worth two minutes of reading

Indeed, in just 2 minutes you can notice even more holes - I just pointed to the most glaring one for people used to algorithm.

Hopefully you will not fall prey to ideological arguments based on a castle of cards with such a flimsy base

[0]https://en.wikipedia.org/wiki/Michael_Crichton#GellMannAmnes...

As I said in another comment, stocks will naturally rise at the very least due to inflation. Prices will go up because the value of the dollar goes up, and the companies perceived value is still roughly the same and grew with inflation.

If inflation is on average around 2%, then stocks ideally increase 2% year over year. This can happen to infinity. That's not the same as infinite growth, but it does hit a lot of the same concepts.

Add this to efficiencies over time, expansion of service offerings which might include capturing new verticals, companies have plenty of room for growth.

This is also why people invest into specific stocks depending on their objectives and risk tolerance. Investing in Apple isn't likely to make you a crap load of money today. But, it's fairly stable. It should outpace inflation so it's a good way to save money with a higher possible yield than say a high interest savings account.

You can also apply this to dividend stocks. Some people make their gains off constantly returning dividends even if the stock itself doesn't increase drastically year over year.

And then you factor in that a lot of companies don't have physical products today. So you can squeeze out even more gains because you can have a relatively fixed cost pricing model that scales well. This is more and more common today than 30 years ago.

As for bringing in an externality like climate change, in an ideal capitalistic situation you'd have companies that would pop up that address these issues thus creating value.

But, if we look at these types of existential threats (which I totally believe are real and matter, don't want to twist that at all) they essentially collapse our current economic system. Therefore, literally nothing matters in terms of buying or selling stocks. We will be facing a massive global crisis that overshadows economic gains to the point that the stock market doesn't matter, and fiat currency is largely diminished.

sorry to nitpick but inflation is the value of the dollar going _down_. if the value of a dollar were to increase, the price of a thing denominated in dollars (i.e. stocks) would decrease (you can buy more with fewer now-more-valuable dollars), ceteris paribus.

To me, it seems the upside of _not_ trading is much smaller than the upside of betting that the market will go back up eventually like it has every time so far.

I have a very tiny (10 shares) amount in cruise lines. The shares were $150 / share pre-COVID, I bought them for $30 / share. So my downside is $300 (minus tax benefits) but my upside is $1,200 (minus taxes). Nothing changed about those companies except having to weather the pandemic.

I even made $70 on call options in a week for the same company. Definitely not trying my luck again but it was an education.

It could have just remained low for a long period, and you may have been forced to cash out to stay off the street depending on how much you put up. No one was able to predict it in March.

The prevailing logic just seems to be "never not buy stocks at any point"

IIRC FINRA has regulations explicitly prohibiting this situation. In this situation Robinhood was either negligent in not verifying a trading regulation that explicitly exists, or was incompetent enough to not know about it.

While blaming the user may apply in some way here, it is Robinhood's responsibility.

It might sound terribly naive these days but financial institutions shouldn't offer their clients products that do not suit clients needs. The caveat emptor rule could only be used in relations to other financial institutions not business or retail clients.

After 1997 Asian financial crisis some exporters successfully challenged banks for being sold currency options (fairly simple instruments)...

To be fair, that's all of retail trading. Unless you are buying and holding a fund, then any sort of trading is gambling. The talking heads on CNBC are just as insightful as the kids on /r/wallstreetbets.

Sure, car manufacturers do need to implement safety measures to the best of their ability, and this only occurred after govt introduced regulations requiring it.

Similarly we would need regulations for leveling the playing field for fintech apps, but its unfair to place all the blame on just Robinhood.

You have to seek it out, read a short document then click "Yes" or something similar.

To get margin trading you again have to seek it out and know specifically what you are looking for and pay them $4.99 / month.

I am not sure if they always had those behind opt-ins but I can't imagine a platform allowing margin trading on free accounts.

Additionally, when you are young, your financial decisions should be riskier. It's actually the smart thing to do.

If a person is willing to spend time learning some the basics of finance, and learning about different companies, I think they would be fine with just picking a few stocks. They just need to be watched carefully. As they start to have more capital, they should look to diversify and look to take on less risk.

Plus, everyone wants different things. Many on /r/wallstreetbets see gambling on the stock market as a way to improve their lives, and I don't think it is the worst option. A risky stock investment is better than wasting money on a sports car or something.

In general, I think when you are very young a very risky investment is not a bad thing. As long as the money isn't needed for other things.

I just feel like I'm starting to see more people throw around the "I'm young so I can make riskier investments" excuse when they put all of their investment money into a select few long shot stocks, and still make out worse than any simple fund.

I do dumb stock purchases but I also own shares of indexes. There is nothing wrong with a "YOLO" into a stock or option you believe in as long as you can afford losing it.

And?

If you can trust them to get behind the wheel of a car with lives at their fingertips, to drink and smoke and do with their bodies as they wish, I don't see why we're wringing hands about their financial prudence.

You will think that too when you reach 40.

> Additionally, when you are young, your financial decisions should be riskier. It's actually the smart thing to do.

Only if you ended up winning. If you lost, then it was the stupid thing to do.

Oh please, get off your high horse. I'm only a couple years away from 40, many of my friends have adult children, and I don't think the average 20 year old is some drooling idiot who can't handle life.

Most 20 year olds are smarter, have more self control, and more financially savvy than my parents, who are in well into their 60s.

I, personally, am looking forward to my 60s to understand what I'm doing wrong right now.

> Most 20 year olds are smarter, have more self control, and more financially savvy than my parents, who are in well into their 60s.

This might be a regional thing. Around here, statistics show that more and more young people are getting their finances in a state that's difficult to recover from before they reach 30.

https://blog.robinhood.com/news/2019/12/12/fractional-shares...