Is Robinhood For The People Or Against The People?

I’m old. I’ve used the same brokerage (Fidelity) my entire life because when you’re old you don’t like change. Underwear, yes. Brokerages, no. But last week I was all set to try Robinhood because I’d read so much about the app and I desperately wanted to make a trade and have confetti rain down from the broker dealer heavens. In many ways, I thought opening a Robinhood account would make me feel young and give me the confidence I needed to skip the little blue pill. Sadly, I couldn’t experience that joy because when I tried to sign up the app said an account already existed with my email address. Then when I tried to change the password it wouldn’t let me and before I knew it I felt like my parents trying to set up an HBO account and I gave up.

And now, after today, I don’t think I want to set up a Robinhood account because Robinhood is clearly an enemy of the people. Or is it? In case you missed it, Robinhood restricted customers ability to trade GameStop, AMC, Blackberry and other stocks today, citing “recent volatility.” Millions of Americans wondered how hedge funds can be allowed to run companies’ stock prices into the ground with short positions without brokerage firms or the SEC so much as batting an eye while a galvanized subreddit can cause a temporary stoppage.

Former United States Secretary of Labor Robert Reich didn’t care for the move.

Politicians from all walks of life volunteered to serve on committees to right this wrong and force Robinhood to allow Americans to trade shares of companies with little to no underlying value whenever and however they want to trade shares in those companies. After all, what could be more un-American than restricting an investor’s right to place a put or a call option, even if, like me, they’re not entirely sure what a put or a call option is, when they feel like it? Things got so weird that Rep. Alexandria Ocasio-Cortez, D-N.Y and  Sen. Ted Cruz almost agreed on something until the AOC reminded Mr. Cruz that he almost had her killed three weeks ago.

The irony, of course, is that Robinhood’s stated mission is to “democratize finance for all.”  The company claims it’s “proud to have created a platform that has helped everyday people, from all backgrounds, shape their financial futures and invest for the long term … or the short term if they can make millions bidding up worthless stocks to ensure a short squeeze that sticks it to hedge fund scumbags intent on getting rich at the expense of average investors. OK, I added that last part.

So which is it? Is Robinhood really out out to help people invest? Was there a lack of avenues for people under 30 to invest before Robinhood came along? Granted, the Fidelity and Vanguard app might not be “fun” in the way that playing Candy Crush or ordering Chipotle on your phone is “fun” but it’s not like there was a serious barrier to entry. There are a number of things that Robinhood does that the old stodgy brokerages don’t. For example, much like Draftkings or Fanduel, when you join Robinhood you get a “free stock,” which is weird because my father always said, “nothing in life is free.” You’re also encouraged to invite friends, which is also odd because I can’t remember a time when Fidelity, Vanguard or Schwab encouraged me to invite friends. That’s like inviting friends to use your bank or sending a friend a suggestion to use a specific brand of underwear.

“Dude, why did you just send me this link to an underwear company?”

“I dunno. I wear them and I like the way they hug my loins and I thought you might too.”

“Bro, don’t use loins when you’re talking to me and I’m a grown ass man. I know how to pick out my own underwear.”

“Ok. Sorry.”

The point is, Robinhood, the champion of the little guy, lost its street cred today. The company can claim a paternalistic, we’re-doing-it-to-protect-consumers’ interests but if that was the case, wouldn’t the restrictions have been put in place days ago? The truth is, the move to restrict trades calls the entire system into the question. Jamie Rogozinsky, the guy who founded the WallStreetBets subreddit, wondered about this very system today.

“How free exactly is the market? Why are the brokers taking action? What are the forces behind there? Obviously, they’re pressured under. It doesn’t make sense for Robinhood to do something like that, given their target demographic. Makes sense for some of the other brokers. But the first question I have is, why did they do that? Where did that pressure come from? And those people are effectively now controlling the price of the market as well. So how free is it?”

Robinhood has said it will allow investors to trade GameStop tomorrow and that news has GME up 61% in after hours trading. But to me, Robinhood is dead. I’m sticking with Fidelity, the brokerage built for old people who hate change and know how to buy their own underwear. The two shares of GME Fidelity allowed me to purchase today at $235 are likely to have doubled by the time you read this, allowing me to feel less guilty when I purchase an expensive IPA from the grocery store tomorrow. America! God bless her and her wondrous stock picking freedoms.