The broker is on the hook. In one case the broker rebated the customer but I suspect most of the time they'll try to collect through regular debt collection channels.
Well also, on pretty much every brokerage, if you get assigned a leg of a spread while your position is ITM then your balance drops through the floor far beyond what your max loss is. But that's just temporary until you close the position fully.
I would hope that isn't what happened here because he could have just closed the other side of the assigned leg and accepted a much more modest loss.
edit: this is where a standard brokerage shines. when this first happened to me i called TDA and they walked me through how to get out of my shitty position. Not sure you can do the same with RH.
A while ago I got a recruiting email from somebody at Robinhood. In it, they listed the number of times their average user interacts with the app daily and framed the high number as something to be proud of.
For a lot of services, this is a neutral (or even good) metric. But for an investing platform, encouraging people to interact more is a fabulous method of turning it into gambling and causing people to blow a huge amount of money.
>Is heightened clickbait and outrage porn Facebook's fault
That's not the same, and NO they are not 'socially responsible' you know how many times that happened at NYSE?
Look it's easy, don't work/play with money you cannot effort to loose, never think more than 10% profit is normal because your a genius, and never ever listen to others.
Is it a fair question to ask if one should be allowed to manage 700k via a mobile app? You can’t even have more than 250k in a bank that’s FDIC insured.
Most of our most effective safeguards in life is to straight up take away even the possibility of fucking up. It doesn’t sound like Robinhood wants to take on any ethical responsibility when things are put in those terms.
What's the difference between a mobile app vs any other interface other than convenience? Should I be required to talk to a financial advisor before managing my own freaking money that I earned?
While we're at it why don't we make Amazon track user bank accounts so they can decide what you can and can't afford and stop you before you buy that $10,000 TV when you still have credit card debt?
Not saying there should be no safety rails, but as an adult you are allowed to ruin your life through bad decisions. Society's obligation is to provide reasonable protection from things outside your control and point out the obvious pitfalls you may not be aware of.
Fidelity tried to upsell me on their margin trading system. At the time I had no idea what trading on margin was, so I read some blogs, watched some YouTube videos, did some high school algebra and decided the risk wasn't worth it at the rates they were offering. For people who don't have that kind of time/education, know your limits and maybe don't buy something you don't at least fundamentally understand.
At what point are people expected to own their mistakes? Seems like every time a story like this pops up there's a discussion as to how to make systems more paternalistic, bail out individuals for their stupid decisions the same way the government bails out corporate America. The correct social response in both cases IMO is the opposite. Financial failure shouldn't be death, but it should have teeth. This guy likely could have declared bankruptcy and recovered in a few years. That is a reasonable safety net IMO.
I understand the sentiment, and you are right on many fronts, we cannot absolve the reality that people do have agency over their decisions.
But, I’ll suggest a testable number. You can buy the 10k TV, no problem. I just don’t think that idea is scaleable indefinitely. Over 250k, I want to force you to make a 5k deposit and agreement with a bankruptcy lawyer so if it goes bad, we automatically bankrupt you. And I want to hire a nice Frontend and product team to make a seamless one-click bankruptcy agreement contract for both sides in a user friendly app. Both the lender and buyer agree to this outcome. Let’s see how that hard limit impacts things. Let’s have you get on the phone with the bankruptcy lawyer to also give verbal consent.
These edge cases can be covered. Go try to get a gun license in Japan and see the types of hoops you have to jump through. It is a prohibitive process that probably reduces gun ownership by a lot.
> What's the difference between a mobile app vs any other interface other than convenience?
When dealing with potentially addictive behaviors with their associated dopamine hit, interface and immediacy matters. This is why there are a lot more heavy cigarette users than cigar users and tobacco pipe users. For cigarettes, being able to have 20 cigarettes with you all the time in your shirt pocket makes it easy to indulge whenever the urge hits you. On the other hand, having to prep a pipe for tobacco gives the person time to think.
I think this is similar to stock trading. If you are addicted to stock trading, being able to whip out your phone and go to the app with FaceID in a few seconds is going to lead to a lot more impulsive behavior than if you had to go to your desktop/laptop and go to the site.
> You can’t even have more than 250k in a bank that’s FDIC insured.
You can have more than 250k, it's just the amount over 250k won't be FDIC-insured. There is no law or rule saying you can't have more than 250k in a single bank account.
These deaths are tragic, and sometimes there are other forces at play.
My friend Andy Ettelson took his own life; his girlfriend had recently broken up with him. Those who didn't know him might assume that his suicide was due to heartbreak, but those close to him knew that his 25-year struggle with his bipolar condition was the more likely culprit. He refused to stay on his meds.
When a mutual friend called me to let me know that Andy was dead, he said, "you may wonder why I sound so emotionless. Let me tell you why: I had been expecting the call for years, so when Andy's father called me, I knew right away what happened."
28 comments
[ 3.3 ms ] story [ 65.7 ms ] threadThe point is selling isn't bad. Its not managing risk that kills you. And for this poor dude it did.
Example: https://markets.businessinsider.com/commodities/news/oil-tra...
As the saying goes: If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem.
Example:
https://old.reddit.com/r/wallstreetbets/comments/aohvow/hi_t...
I would hope that isn't what happened here because he could have just closed the other side of the assigned leg and accepted a much more modest loss.
edit: this is where a standard brokerage shines. when this first happened to me i called TDA and they walked me through how to get out of my shitty position. Not sure you can do the same with RH.
That SubReddit glorifies playing fast and loose with silly bets.
For a lot of services, this is a neutral (or even good) metric. But for an investing platform, encouraging people to interact more is a fabulous method of turning it into gambling and causing people to blow a huge amount of money.
I see this as roughly equivalent. IMO, Robinhood is being socially irresponsible if they are making design choices intended to increase engagement.
That's not the same, and NO they are not 'socially responsible' you know how many times that happened at NYSE?
Look it's easy, don't work/play with money you cannot effort to loose, never think more than 10% profit is normal because your a genius, and never ever listen to others.
Most of our most effective safeguards in life is to straight up take away even the possibility of fucking up. It doesn’t sound like Robinhood wants to take on any ethical responsibility when things are put in those terms.
While we're at it why don't we make Amazon track user bank accounts so they can decide what you can and can't afford and stop you before you buy that $10,000 TV when you still have credit card debt?
Not saying there should be no safety rails, but as an adult you are allowed to ruin your life through bad decisions. Society's obligation is to provide reasonable protection from things outside your control and point out the obvious pitfalls you may not be aware of.
Fidelity tried to upsell me on their margin trading system. At the time I had no idea what trading on margin was, so I read some blogs, watched some YouTube videos, did some high school algebra and decided the risk wasn't worth it at the rates they were offering. For people who don't have that kind of time/education, know your limits and maybe don't buy something you don't at least fundamentally understand.
At what point are people expected to own their mistakes? Seems like every time a story like this pops up there's a discussion as to how to make systems more paternalistic, bail out individuals for their stupid decisions the same way the government bails out corporate America. The correct social response in both cases IMO is the opposite. Financial failure shouldn't be death, but it should have teeth. This guy likely could have declared bankruptcy and recovered in a few years. That is a reasonable safety net IMO.
But, I’ll suggest a testable number. You can buy the 10k TV, no problem. I just don’t think that idea is scaleable indefinitely. Over 250k, I want to force you to make a 5k deposit and agreement with a bankruptcy lawyer so if it goes bad, we automatically bankrupt you. And I want to hire a nice Frontend and product team to make a seamless one-click bankruptcy agreement contract for both sides in a user friendly app. Both the lender and buyer agree to this outcome. Let’s see how that hard limit impacts things. Let’s have you get on the phone with the bankruptcy lawyer to also give verbal consent.
These edge cases can be covered. Go try to get a gun license in Japan and see the types of hoops you have to jump through. It is a prohibitive process that probably reduces gun ownership by a lot.
When dealing with potentially addictive behaviors with their associated dopamine hit, interface and immediacy matters. This is why there are a lot more heavy cigarette users than cigar users and tobacco pipe users. For cigarettes, being able to have 20 cigarettes with you all the time in your shirt pocket makes it easy to indulge whenever the urge hits you. On the other hand, having to prep a pipe for tobacco gives the person time to think.
I think this is similar to stock trading. If you are addicted to stock trading, being able to whip out your phone and go to the app with FaceID in a few seconds is going to lead to a lot more impulsive behavior than if you had to go to your desktop/laptop and go to the site.
You can have more than 250k, it's just the amount over 250k won't be FDIC-insured. There is no law or rule saying you can't have more than 250k in a single bank account.
My friend Andy Ettelson took his own life; his girlfriend had recently broken up with him. Those who didn't know him might assume that his suicide was due to heartbreak, but those close to him knew that his 25-year struggle with his bipolar condition was the more likely culprit. He refused to stay on his meds.
When a mutual friend called me to let me know that Andy was dead, he said, "you may wonder why I sound so emotionless. Let me tell you why: I had been expecting the call for years, so when Andy's father called me, I knew right away what happened."