Rolling US Economy Into The Shitbin Thread

https://www.nytimes.com/2020/07/08/technology/robinhood-risky-trading.html

“They encourage people to go from training wheels to driving motorcycles,” Scott Smith, who tracks brokerage firms at the financial consulting firm Cerulli, said of Robinhood. “Over the long term, it’s like trying to beat the casino.”

oh yeah i wanted to read this last month but had run out of free articles

this is a particularly bold take

Vlad Tenev, a founder and co-chief executive of Robinhood, said in an interview that even with some of its customers losing money, young Americans risked greater losses by not investing in stocks at all. Not participating in the markets “ultimately contributed to the sort of the massive inequalities that we’re seeing in society,” he said.

i felt very reassured and reaffirmed by the chart that showed Schwab customers as the most cautious investors! Yes! It is me! I _am_ a Schwab customer

At least a casino gives you free alcohol and possibly some bachelorette parties to interact with.

Over the long term, it’s like trying to beat the casino

On the one hand, it's not that much like that, because the casino has a long-term negative expected value, and investing in stocks, even day-trading, doesn't. On the other hand, it's definitely true that Tenev's business is giving finance companies the opportunity to skim money from inexperienced investors who can be persuaded to overpay for things in a herd.

But yes, everybody who is lucky enough to have money saved beyond immediate six-month needs should put it in a big Vanguard zero-fee meatgrinder fund and forget about it until they're old.

it's like being an uber driver but your car costs $800,000

$5,000 passenger charge - cheap jeans caused minor perforation in leather seats

But yes, everybody who is lucky enough to have money saved beyond immediate six-month needs should put it in a big Vanguard zero-fee meatgrinder fund and forget about it until they're old.

― Guayaquil (eephus!), Tuesday, August 18, 2020 11:57 AM (thirty-three minutes ago)

you're being sarcastic, yeah?

i don't think so, that's basically what i do

Me too

like one of the pre-mixed "target" funds?

When I thought I was going to have enough money for a retirement account, all advice was to put it into one of the Vanguard ‘Total Stock Market’ or Balanced Market finds.

And to look at it as little as possible.

Chief KyiV neVer returned.

you're being sarcastic, yeah?

Wait, no, not at all, why?

it's a common thing to do, and not a _bad_ thing to do -- like, I can see it, from the individual's point of view, as if they had an employer pension and the pension fund was managed by a responsible third party. I don't think people should be obligated to do regular maintenance on their retirement savings (if that's the function of the savings -- other people have shorter term goals).

However, if you want to "maximize" your investments, the big zero-fee Vanguard fund isn't the way to go. ... And I am definitely not saying everyone should want to do this.

Also, one of the positive aspects of DIY investing is that you have more control over where your money goes -- I'm thinking of all the protests / activism around pension fund divestments for ethical reasons -- granted, there are targeted funds for "social impact" and "ethical investing" ... i guess i am probably just being too nit-picky.

Not having more control over where your money goes - ie minimizing the potential for an individual to fuck it up - is a large part of the point.

at least for me it is not my retirement money and not the only investment i do but i don't touch robinhood-type things, also easier on the ethics forms i have to do at work for individual stocks and sector funds

the crash is coming

― Nhex

on november 4, 2020

come on, we all fucking know this, right?

america doesn't have a functioning economy

Robinhood does not force people to trade, of course. But its success at getting them do so has been highlighted internally. In June, the actor Ashton Kutcher, who has invested in Robinhood, attended one of the company’s weekly staff meetings on Zoom and celebrated its success by comparing it to gambling websites, said three people who were on the call.

Mr. Kutcher said in a statement that his comment “was not intended to be a comparison of business models nor the experience Robinhood provides its customers” and that it referred “to the current growth metrics.” He added that he was “absolutely not insinuating that Robinhood was a gambling platform.”

my company has its own internal group of financial advisors and for a fee, we can give them control over our 401(k) investment strategy. I did that years ago and my returns went through the roof.

except this year obv but the losses have been managed.

Not having more control over where your money goes - ie minimizing the potential for an individual to fuck it up - is a large part of the point.

― Donald Trump Also Sucks, Of Course (milo z), Tuesday, August 18, 2020 1:18 PM (thirty-one seconds ago)

Oh, I agree -- and this is why I believe the "starve the beast = let's eliminate social security because individuals should be able to do what they want" philosophy is bad and will result in even worse poverty problems and income disparities than we have now.

Like, even if I were to subscribe to the position that the problem is financial literacy, and if as a country we did more to educate people on these things ... (if y'all are bored at some point, we can play the fun game where I defend this position while everyone attacks it) ... but even if I did wholly believe in the "financial literacy" thing, people will fuck up financially and make "bad" decisions or will just have Job-like series of tragedies happen to them (and most likely the victims of these tragedies will be poor black people or other POC) ... then what? As a society, we shouldn't say, "Whelp, sucks to be you, start a gofundme or starve" ...

However, I feel like there is potential for using investment funds in a social justice / activist / anti-corporate way ... and some of my aversion to the "just put all the money in a Vanguard fund and let them handle it" is that investing (and knowledge / skills related to it) could do a lot to challenge the status quo.

Every bit of advice I've read has just said put money in Vanguard Star Fund.

It also depends on whether it's a tax-sheltered investment ...

A question for y'all: for those of you who are vehemently anti-capitalist, progressive leftists, fuck Joe Biden and the Democratic Party -- do you feel awkward or any sense of conflict about having your money invested in some Vanguard-type managed fund?

Like, I have ethical issues and feelings like that in terms of my investments (mine are different but not virtuously aligned with my politics by any means)

absolutely

My KBR shares have gone up in value recently -- not 100% proud of that.

otoh I rationalize this investment in the profitability of fascist-adjacent industry by noting how many hours I have volunteered doing work for anarchist collectives and activists ... sorry for boring middle-aged ilx-ing

not really, i'm forced to either save or spend money. i don't have a lot of money, i'm not a hedge fund that can control what these corporations do. if i put it in a savings account the bank is going to decide where to put it and take all the gains.

I do feel conflict and researched socially responsible investing. I even put a good deal of money in an investing start-up who only invested in progressive/ethical companies. It lost money and they closed up shop. Vanguard offers it's own version, but it's returns are not as good. u

I'm an anti-capitalist who works at one of the the most successful capitalist enterprises of all time. So hypocrisy is not one of my top ten sins :P

There are other things you can invest in that aren't these big corporate-managed funds though -- someone I know had money in this fund that basically did loans to build and improve low-income housing, for example.

I even put a good deal of money in an investing start-up who only invested in progressive/ethical companies. It lost money and they closed up shop.

Interesting! what was it called?

DJI - do you get RSU's or ESPP stuff or ...? How much of your compensation is in shares of this enterprise?

Over 50% of my comp is in RSUs. Which just keep going up and up.

I was feeling kinda glum about all of it and ended up taking a lot of money out of the market earlier this year (luckily just pre-Covid) and bought a house. which i divided into sort of a duplex, and am about to turn the basement into a studio apt where I’ll live and... *sigh* guess be a godforsaken landlord.

no ethical anything under etc etc

damn yall are rich. jealous tbh

still technically have negative net worth, sort of like donald trump ;)

However, if you want to "maximize" your investments, the big zero-fee Vanguard fund isn't the way to go. ... And I am definitely not saying everyone should want to do this.

what does this mean? you should only buy the stocks that go up lots, not the other stocks? well yes, but this doesn't seem like actionable advice, and it also neglects risk.

i'm skeptical of the social value of ESG investing, basically this:
https://www.bloomberg.com/opinion/articles/2019-11-11/esg-stocks-are-graded-on-a-curve

not really rich. just old. my very conservative govt-hating parents were perpetually broke when I was growing up and it lead me to a path of aggressive saving & investing (no-load index/ autopilot) when I was like 19.

well i'm glad this thread took the turn it did, i should think about this stuff if i ever get out of cc debt.

on the whole "the crash is coming" tip i don't know jack about economics so take this with a bucketful of salt but i feel like we're going to be in those mode of people above a certain threshold floating upwards and people below a certain threshold being gutted for a long while and maybe there isn't a single "economy" anymore.

^i more or less agree with this tbh.

w the caveat that when it really comes down to it I don’t know jackshit about the economy either

However, if you want to "maximize" your investments, the big zero-fee Vanguard fund isn't the way to go

I know people say this (if by "maximize" you mean some version of "end up with the most money") but I have never seen any convincing evidence for it, and people have very motivated-cognition reasons for saying it. For a managed fund to be worth the fees, the manager has to be able to beat the market by a lot, and the evidence is sporadic at best that you can identify people who are going to beat it even by a little.

The issue of controlling your own investments to maintain influence is a different story and one I haven't thought about as much.

A question for y'all: for those of you who are vehemently anti-capitalist, progressive leftists, fuck Joe Biden and the Democratic Party -- do you feel awkward or any sense of conflict about having your money invested in some Vanguard-type managed fund?

― sarahell

for me, uh, personally benefiting from capitalism isn't really much different from benefiting from white supremacy (indeed, there does seem to be a significant statistical correlation there). i'm complicit in, and benefit from, a grossly unequal system. what i would like to see is for the system to become _less_ grossly unequal, and honestly? i'm perfectly willing to work within capitalism to do that. whenever i suggest such a thing, though, i find that a lot of _other_ people who are _also_ beneficiaries of, complicit in, the same grossly unequal system, are very quick to tell me "hey, buddy, you don't like it, the door's that way"

and those interactions _do_ give me a pretty strong sense of conflict and awkwardness.