The Dark Side of Zero-Fee Stock Trading

One of my missions for the Brain Buddha is to educate and expose many lies in what is a lot of predatory behaviours.

With a global pandemic and government stimulus cheques in people's hands, it's created a new batch of amateur retail investors.

Especially with no-fee trading apps like Robinhood (I'm not linking to them because I feel their business practice is not "disruptive", it's predatory and selling their customers out without them even knowing it.), it's made it easy for people from all walks of life to begin trading in stocks.

I'm a firm believer in stock investing...

...BUT you need to educate yourself first.

Don't invest based upon trends or because "everyone else" is buying a specific stock (hello Kodak & Hertz).

When I read this article about how Robinhood actually makes money, it really makes weary for their unsuspecting customers. 

The strategy I try to instill in my readers is:

  • Have a proper asset allocation for your investments (i.e. don't be 100% equities only)
  • NEVER follow the crowd. Just look at Tesla's stock (above $2,000/share at the time of this writing), everyone is starting to pile in now, but the ones who really made money were the ones who bought earlier on. Don't get me wrong, I love Tesla and I believe it still has growth potential but the hyper-gains were already made prior to this price increase.
  • Warren Buffett is successful because he only invests in companies he understands. Ensure you understand what you're investing in.
  • It's YOUR money, so it's YOUR responsibility to do your due diligence and take adequate precautions. Assume no one will come in and save you if you lose your money.
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