The Trading App Robinhood Takes From You and Gives to the Rich
Allez vous faire plumer en échange du sentiment d’être un vrai capitaliste, mon c...
As far as the fight against capitalism is concerned, democratizing finance is supplying temporary oxygen to a terminally ill patient. And, ultimately, that has been one of the primary functions of Robinhood, intended or otherwise. It is directly feeding a sputtering, inflated Frankenstein market with a new cast of investors to push it forward just a few more staggering steps. By any measure (price to earnings ratios, price to sales, price to book value, market cap to GDP), the market is inexplicably overpriced and has been so even before the emergence of COVID-19. In a century’s worth of data on the market, one of the few known facts is that it will periodically crash. And it will inevitably be the small-account, novice investors who will be the first and the most violently wiped out.
But even in our current bull market, stockbrokers are always looking for a loser. Incoming retail traders have historically played that part. In the SEC lawsuit presented against Robinhood, one of the issues at hand is a practice called “payment for order flow.” It means that Robinhood is selling your trade to a third-party company for execution. Those secondary brokers will then, commonly, “take the other side.” They are betting that you are wrong — and make double when you are. But even if you win, the brokerage will have made spread and commission charges from you. It’s a zero-stakes game for them and a rigged one for users. One of the more sinister aspects, here, is that secondary brokers are lining up — specifically — for Robinhood’s trade orders. They are paying a huge premium for the right to exploit the app’s newcomers by taking the other side of their bets.
C’est un peu comme se porter volontaire quand ton gouvernement déclare la guerre à un pays que tu n’aimes pays de toute manière. T’es déjà mort quand les autres comptent leurs gains.