I tossed $29.50 at this just for fun. I think this is a brilliant strategy to make money for Robin Hood but let's face it it's pure gambling on the outcome of the election. There is no market or futures in this that are anything tangible. Are you buy in and if you're chosen candidate wins then you get $1 for every share you bought. The other side gets nothing.
Of course it doesn't actually close out until January 6th. Since effectively the election will be decided tomorrow or the day after at the latest there's not going to be really any movement in this market after that time. So right now it looks like close to 200,000 shares have been sold. Robinhood gets to sit on those for 2 months and let's say make a fairly conservative 8 to 10% and then pay all the money back at the end. It's a fantastic way to get a zero interest loan from your people while your people get to gamble and do something fun.
> sit on those for 2 months and let's say make a fairly conservative 8 to 10%
Um, that doesn't sound conservative at all! 7%-ish is what we expect the whole US stock market to return in an _average_ year, 6x that would be insane.
It may not be typical but the vanguard Total market index fund is up 19% year to date. Robinhood is still paying 4.5% interest just for you to leave cash holding in their pockets. If they can afford that kind of interest rate to just park cash with them that you can pull it literally anytime how much do you think they're really making? Still think they're just getting 7% a year?
The recent returns on VTI are irrelevant. The market goes down, the market goes up and nobody can predict which way it will move next. We only know how it behaves over decades, as a result of economic output.
Robinhood, money market accounts, and HYSAs are offering high interest rates because we are in a high interest rate environment. (Which usually correlates to a high inflationary environment.) So yes, if Robinhood is behaving like any other bank, they are happy to offer their customers 4.5% in order to buy bonds (and whatever else) at 5-6% because even though the margin is small, the volume more than makes up for it.
I used to think I was pretty good at being able to pick who was going to be president in the weeks leading up to an election. Until we elected a president who I assumed was entirely unelectable. That's when I realized I had no idea how politics worked and was better off mostly ignoring the whole quater annis popularity contest-slash-shitshow.
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[ 3.4 ms ] story [ 31.3 ms ] threadOf course it doesn't actually close out until January 6th. Since effectively the election will be decided tomorrow or the day after at the latest there's not going to be really any movement in this market after that time. So right now it looks like close to 200,000 shares have been sold. Robinhood gets to sit on those for 2 months and let's say make a fairly conservative 8 to 10% and then pay all the money back at the end. It's a fantastic way to get a zero interest loan from your people while your people get to gamble and do something fun.
Um, that doesn't sound conservative at all! 7%-ish is what we expect the whole US stock market to return in an _average_ year, 6x that would be insane.
The recent returns on VTI are irrelevant. The market goes down, the market goes up and nobody can predict which way it will move next. We only know how it behaves over decades, as a result of economic output.
Robinhood, money market accounts, and HYSAs are offering high interest rates because we are in a high interest rate environment. (Which usually correlates to a high inflationary environment.) So yes, if Robinhood is behaving like any other bank, they are happy to offer their customers 4.5% in order to buy bonds (and whatever else) at 5-6% because even though the margin is small, the volume more than makes up for it.