
20-year-old lost 700k on Robinhood options, takes life - zoolander2
https://www.marketwatch.com/story/finance-isnt-worth-losing-your-life-over-the-heartbreaking-story-of-a-rookie-trader-who-racked-up-700000-in-debt-2020-06-14
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UncleMeat
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.

~~~
zimmern
So it's Robinhood's fault somehow?? Holee fuk. This is why we can't have nice
things.

~~~
UncleMeat
Is heightened clickbait and outrage porn Facebook's fault?

I see this as roughly equivalent. IMO, Robinhood is being socially
irresponsible if they are making design choices intended to increase
engagement.

~~~
nix23
>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.

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runawaybottle
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.

~~~
scottLobster
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.

~~~
RcouF1uZ4gsC
> 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.

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brian_cunnie
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."

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theshrike79
Another discussion:
[https://news.ycombinator.com/item?id=23523246](https://news.ycombinator.com/item?id=23523246)

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mam2
He actually didnt lose 700k it was a UI problem.

~~~
dirtnugget
Where’s the source to that?

~~~
howeyc
It's a pretty well known Robinhood "glitch" at this point. Has to do with how
they handle assigned/exercised legs of option spreads.

Example:

[https://old.reddit.com/r/wallstreetbets/comments/aohvow/hi_t...](https://old.reddit.com/r/wallstreetbets/comments/aohvow/hi_this_morning_i_lost_172k_trading_options_on_my/)

~~~
jerednel
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.

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joshbaptiste
What happens if you over leverage and end up owing your broker after a bad
trade and you can't pay it back..

~~~
anitil
For you? Bankruptcy. I imagine the broker would have insurance.

~~~
joshbaptiste
ok, something the poor kid could have bounced back from after a few years of
bad credit etc... dam sad.

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blastonico
This is more common than than thought. Fortunately (or not?) these cases don't
hit the press.

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badrabbit
They added options trading as well which lets you take on more risk if you're
selling.

