New To Investing Thread

[DQ12]

Robinhood's TOS:

I understand that My Account is self-directed. Accordingly, I appoint Robinhood Financial as My agent for
the purpose of carrying out My directions to Robinhood Financial in accordance with the terms and
conditions of this Agreement and any attendant risks with respect to the purchase or sale of securities.
Robinhood Financial is authorized to open or close My Account(s), place and withdraw orders and take
such other steps as are reasonable to carry out My directions. All transactions will be effected only on
My order or the order of My authorized delegate, except as described in Section 10. I understand
Robinhood Financial provides trading and brokerage services through the Robinhood website (the
"Website") and the Robinhood mobile application (the "App"). I agree to receive and transmit financial
information through such electronic means. My use or My grant of access to My Account to any third
party to access information or place transactions in My Account is solely at My risk.

10. I agree that Robinhood shall be entitled to act upon any oral instructions given by Me so long as
Robinhood reasonably believes such instruction was actually given by Me or My authorized agent

[kim carnes]

Guys, I’m going to go out on a limb here and say that any actions taken by robinhood today were not done bc they were trying to appease wall street bc that would be incredibly dumb of them.  It is antithetical to their entire business model.  But I could be wrong.

[steve dave]

Guys, I’m going to go out on a limb here and say that any actions taken by robinhood today were not done bc they were trying to appease wall street bc that would be incredibly dumb of them.  It is antithetical to their entire business model.  But I could be wrong.

agreed

[wetwillie]

I imagine they will retain their customer base and probably grow even.

[steve dave]

maybe letting every 18 yo kid play with margin was a bad idea?

https://twitter.com/maybebullish/status/1354909048420900865

[Pete]

Or maybe they were covering the transfer agent fees and all that crazy transactional fee bullshit and saying "free trades" but really they were like "I think we can make enough to cover the trades" and things got weird on the transaction fee structure and it was going to cost them a bunch and they just said eff it no.

[sys]

https://twitter.com/zGuz/status/1354854476801302528

that makes sense.  guy does a good job of communicating.

[sys]

Or maybe they were covering the transfer agent fees and all that crazy transactional fee bullshit and saying "free trades" but really they were like "I think we can make enough to cover the trades" and things got weird on the transaction fee structure and it was going to cost them a bunch and they just said eff it no.

i think (to be clear, i'm purely guessing), that they would have (maybe were) been willing to eat a few thousandth of a penny in losses on gme trades instead of making a few thousandth of a penny like normal rather than suffer this sort of publicity.  the liquidity concerns make more sense as a reason for a brokerage to shut down new trading.

[Kat Kid]

Robinhood CEO CNBC interview cliffs

-we limited trading in certain stocks

why? did the sec call? problems with liquidity?

-we did not do this at the direction of market makers, hedge funds or others.
-we are a brokerage firm with clearinghouse requirements. when there is volatility these amounts can fluctuate a lot.
-to protect our firm and our customers we had to act.

it sounds like there was a liquidity problem

-there was no liquidity problem, this was done pre-emptively and proactively. customers could sell them, we are working to fix this by tomorrow morning.
-we are the #1 app store, we are seeing unprecedented interest in investing and our platform
-we stand for everyday investors opening up access, commission free, whatever they want.
-in the past we have been criticized for not having more restrictions

but people say
-we have not seen this level of concentrated interest in a small number of names ever before
-we believe you should be able to buy/sell whatever you want subject to requirements

what do you say to customers that say maybe I should go somewhere else if you shut me out when I need to trade?

-we understand, we feel we made the right call
-we want a stable platform going forward and it is a priority to not have restrictions in the future

are you concerned investors fully understand the risks?
-we want to give education, but this is really about access
-we have stood for access in the face of criticism previously, we want to give them that ability
-the more individuals have access, the better we will be, it is everything we stand for

walk us through the moment you needed to restrict, you drew on credit lines, it sounds like something you should have figured out prior to today
-things that go viral on social media, this is something new. we've never been #1 on app store before, this is unprecedented
-credit lines was proactive, the deposit requirements at clearinghouses govern how much our clients can buy
-we want to put our customers in a position where our customers can be unrestricted so we tapped our credit lines to allow that

you are going to start allowing buying tomorrow
-what happens if this triggers the same thing tomorrow?
-we want to have buying safety the team was working very hard dealing with unprecedented volumes, we want to do that safely and be clear in communications, we shouldve been out there sooner, I own that and we are doing what we can for our customers

[sys]

Can someone explain to me why short selling provides any valuable service to a market?  With put options readily available, why should shorts be allowed to exist?

shorting helps with efficient pricing.  i'm not knowledgeable enough to know if derivatives alone would create the same effect, but i don't really see why it would be better to allow only one or the other.

[DaBigTrain]

Robinhood CEO CNBC interview cliffs

-we limited trading in certain stocks

why? did the sec call? problems with liquidity?

-we did not do this at the direction of market makers, hedge funds or others.
-we are a brokerage firm with clearinghouse requirements. when there is volatility these amounts can fluctuate a lot.
-to protect our firm and our customers we had to act.

it sounds like there was a liquidity problem

-there was no liquidity problem, this was done pre-emptively and proactively. customers could sell them, we are working to fix this by tomorrow morning.
-we are the #1 app store, we are seeing unprecedented interest in investing and our platform
-we stand for everyday investors opening up access, commission free, whatever they want.
-in the past we have been criticized for not having more restrictions

but people say
-we have not seen this level of concentrated interest in a small number of names ever before
-we believe you should be able to buy/sell whatever you want subject to requirements

what do you say to customers that say maybe I should go somewhere else if you shut me out when I need to trade?

-we understand, we feel we made the right call
-we want a stable platform going forward and it is a priority to not have restrictions in the future

are you concerned investors fully understand the risks?
-we want to give education, but this is really about access
-we have stood for access in the face of criticism previously, we want to give them that ability
-the more individuals have access, the better we will be, it is everything we stand for

walk us through the moment you needed to restrict, you drew on credit lines, it sounds like something you should have figured out prior to today
-things that go viral on social media, this is something new. we've never been #1 on app store before, this is unprecedented
-credit lines was proactive, the deposit requirements at clearinghouses govern how much our clients can buy
-we want to put our customers in a position where our customers can be unrestricted so we tapped our credit lines to allow that

you are going to start allowing buying tomorrow
-what happens if this triggers the same thing tomorrow?
-we want to have buying safety the team was working very hard dealing with unprecedented volumes, we want to do that safely and be clear in communications, we shouldve been out there sooner, I own that and we are doing what we can for our customers

As someone who also watched the interview can confirm this is a very good cliff notes post

[sys]

it sounds like there was a liquidity problem

-there was no liquidity problem, this was done pre-emptively and proactively.

these answers generally seem reasonable, but this is pretty funny.  - "there was no liquidity problem because we stopped trading to prevent a liquidity problem."

[Spracne]

Hi folks, dumdum here. Can anyone explain to me how after hours trading happens? What sort of market/exchange facilitates these transactions?

[Kat Kid]

it sounds like there was a liquidity problem

-there was no liquidity problem, this was done pre-emptively and proactively.

these answers generally seem reasonable, but this is pretty funny.  - "there was no liquidity problem because we stopped trading to prevent a liquidity problem."

Yeah, his talking points also included a refrain about “clients were also able to trade thousands of other stocks the entire time” which I left out.

I actually came away thinking this is actually pretty good news and as long as robinhood can survive the trading day tomorrow without shutting down the same names going to do a lot to improve their image particularly when even interactive brokers has limited trading on the same names.

He did directly say this had nothing to do with an  SEC investigation or them selling their trade flow causing a conflict of interest which were both really awful (but unlikely) reasons.

[sys]

good thread with more detail on why the brokerages got caught without sufficient liquidity.  can't vouch for the accuracy, but the tweeter seems to know what he's talking about.

one upshot might be that if being able to trade the hottest names on the hottest days is important to you, you should probably stick to the largest brokers (but i think larger brokerages also halted trades today?).

https://twitter.com/KralcTrebor/status/1354952686165225478

[steve dave]

Vanguard: Mess Around With Fuckboy Brokerages And Find Out

[steve dave]

When You Need To Know Your Brokerage Has Li(t)quidity....Vanguard.

[steve dave]

Vanguard: There Is No VIX That Will Stop Us From Swapping VOO

[steve dave]

https://twitter.com/caseyjohnston/status/1354967253146591232

[Pete]

good thread with more detail on why the brokerages got caught without sufficient liquidity.  can't vouch for the accuracy, but the tweeter seems to know what he's talking about.

one upshot might be that if being able to trade the hottest names on the hottest days is important to you, you should probably stick to the largest brokers (but i think larger brokerages also halted trades today?).

https://twitter.com/KralcTrebor/status/1354952686165225478

This was good, I liked this explanation.

[puniraptor]

do i directly own a stock i bought through robinhood? is there a way to access/sell whatever stocks i bought through robinhood outside of robinhood?

[Spracne]

The interesting thing is that no one knows. Not even Robinhood or FINRA.

[chum1]

Investopedia has all the answers.

https://www.investopedia.com/ask/answers/021015/how-do-you-transfer-common-stock-one-broker-another.asp

[puniraptor]

Investopedia has all the answers.

https://www.investopedia.com/ask/answers/021015/how-do-you-transfer-common-stock-one-broker-another.asp

but that tweetthread told me that robinhood isnt a broker, and robinhood uses a variety of brokers?

i can just get a real broker and tell them to find and move my robinhood purchased shares?

[puniraptor]

Investopedia has all the answers.

https://www.investopedia.com/ask/answers/021015/how-do-you-transfer-common-stock-one-broker-another.asp

but that tweetthread told me that robinhood isnt a broker, and robinhood uses a variety of brokers?

i can just get a real broker and tell them to find and move my robinhood purchased shares?

ok i googled it and basically you just get a real broker and ask them to do it.