Investing megathread extravaganza

[DaFace]

A place to talk about investing stuff.

[MagicHef]

Originally Posted by FD

This is just completely insane. Robinhood is trying to stop its users from buying into an obvious crash and losing everything. Is it overly paternalistic? Yes. But it is definitely in the interests of the retail traders on the app.

You can't actually believe this.

[Shag]

Originally Posted by FD

This is just completely insane. Robinhood is trying to stop its users from buying into an obvious crash and losing everything. Is it overly paternalistic? Yes. But it is definitely in the interests of the retail traders on the app.

The **** it is. This whole thing basically bankrupted Melvin (hedge fund), and Citadel helped bail them out. The guy who founded Citadel owns a huge stake in Robinhood, so he made a call. This is protecting the hedge funds, and has nothing to do with protecting its users. I hope RH gets buried over this.

[Rain Man]

To me, this is an interesting comparison of "market mentality" versus "pump and dump". It's illegal to pump an dump, so what were the motivations and actions of the people who started this?

Of course, we all know that the game is rigged anyway. I bet 0.00000001 percent of insider trading is investigated, and then you've got things like that one big player rigging the software to execute their trades a microsecond before retail trades so they can take the difference.

Sometimes I worry a bit that the entire stock market is an unintentional ponzi scheme and at some point someone will do some math and the whole thing will collapse. For example, I give some money to google via stock that they use to fund growth. The promise that I get in return is that they'll grow and I'll then be able to sell the stock to the next people, who themselves buy it on the promise that google will grow. It seems kind of pyramid-like. With dividend stocks I like the equation better, because I'm getting a return on my money, but with non-dividend stocks I sometimes feel like I'm buying air.

[Dunerdr]

So should i remove all investments from robinhood with a class action suit being filed?

[MagicHef]

Originally Posted by Rain Man

To me, this is an interesting comparison of "market mentality" versus "pump and dump". It's illegal to pump an dump, so what were the motivations and actions of the people who started this?

The motivations were pretty simple. By over-shorting GME, hedge funds essentially forced themselves into a captive market. Someone noticed and decided to try to take advantage to make money.

[ReynardMuldrake]

The people calling it a pump and dump are way off base. This is not a pump and dump. WSB are buying and holding trying to cause a short squeeze. Look at what happened to VW in 2008. The squeeze has not happened yet. If that happens it will be like something out of a movie. Ever see Trading Places?

[DaFace]

Originally Posted by Rain Man

To me, this is an interesting comparison of "market mentality" versus "pump and dump". It's illegal to pump an dump, so what were the motivations and actions of the people who started this?

Of course, we all know that the game is rigged anyway. I bet 0.00000001 percent of insider trading is investigated, and then you've got things like that one big player rigging the software to execute their trades a microsecond before retail trades so they can take the difference.

Sometimes I worry a bit that the entire stock market is an unintentional ponzi scheme and at some point someone will do some math and the whole thing will collapse. For example, I give some money to google via stock that they use to fund growth. The promise that I get in return is that they'll grow and I'll then be able to sell the stock to the next people, who themselves buy it on the promise that google will grow. It seems kind of pyramid-like. With dividend stocks I like the equation better, because I'm getting a return on my money, but with non-dividend stocks I sometimes feel like I'm buying air.

This past year has certainly been an interesting case study in how stock price and financial performance are loosely linked at best.

[MagicHef]

Originally Posted by Dunerdr

So should i remove all investments from robinhood with a class action suit being filed?

After reading more about how Robinhood actually makes its money, I am removing my investments and moving to a real brokerage.

[KCUnited]

How does one move out of RH to another platform?

[MagicHef]

Originally Posted by DaFace

This past year has certainly been an interesting case study in how stock price and financial performance are loosely linked at best.

The value in GME is not in the financial performance of the company, but in the volume of shorts.

[Rain Man]

Originally Posted by DaFace

This past year has certainly been an interesting case study in how stock price and financial performance are loosely linked at best.

Yeah, the market was up last year, notably up, while the economy tanked. I know that the market prices in future performance, but future performance is needed just to get back to where we were two years ago. So why is the market 15 percent higher than that? It's not bargain shopping because it's at a premium. I follow the tried and true mantra of not trying to time the market, but I really can't figure out how we're going to have an overperforming market for the next two years if there's any connection at all to the real world.

And that's not even considering my big picture question of how the market outperforms inflation over time. It leads to bigger and bigger discrepancies between the stock market and the rest of the world.

It's kind of the only game in town so I keep playing it, but I try not to think about what the foundation is under this big house of cards.

[eDave]

Originally Posted by MagicHef

After reading more about how Robinhood actually makes its money, I am removing my investments and moving to a real brokerage.

This actually worked out for me real well. My orders placed last night and to fund at opening were all cancelled by RH and cleared it out. I transferred to Fidelity and bought the dip.

[DaFace]

Originally Posted by MagicHef

The value in GME is not in the financial performance of the company, but in the volume of shorts.

None of it matters unless you time it right. It's a bubble that will crash, which means that a vast majority of people involved are going to lose money on it.

[Rain Man]

Originally Posted by MagicHef

The value in GME is not in the financial performance of the company, but in the volume of shorts.

Good point, and I think that's part of my worry in the long term. The stock market was originally about giving a company some money to fuel growth, and in exchange getting a return for it. That's simple and logical.

These days there are so many games played around betting and leveraging and options and stops and stuff that I've probably never heard of. I wonder how much money is actually invested in stocks versus the money that's invested in placing bets on the financial manipulations surrounding stocks. I understand theoretically why that stuff exists, but it's all poker. It's money that's not invested in anything but trying to guess the behavior of other people.

[jdubya]

Originally Posted by KCUnited

How does one move out of RH to another platform?

Robin Hood isn’t alone. I just heard Ameritrade and Schaub have done the same.