Robinhood Slide No Surprise

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Robinhood's tumble in the stock market comes as no surprise to me. It's essentially what is known as a "retail investor's exchange." In other words, it is designed to allow average Joe's to enter the markets and buy fractional shares of stocks rather than have to buy whole shares. It is still a good idea in that it makes getting started in the stock market more easy for some people who may have otherwise avoided investing at all. The problem has been, for me, that Robinhood came around at the height of the markets, and the stock market has of course been on a tear for quite some time. And the reality is that most of the people who use Robinhood's services are simply not "investors" in the finer sense of the word. They don't know what they are doing. And that is probably the reason for the drop in activity on Robinhood which lead to the stock's dive. Not that long ago I commented that we were reentering what is known as a "stock picker's market." That is, a market in which you really have to do your homework and know what you are doing and what you are investing in, and how to invest in order to be well equipped to make sound judgements as to price movements, valuations and so on and so forth. The market we were in was essentially one in which you could put a variety of stocks onto a dart board, throw some darts, and buy whatever stocks the darts landed on and you would make money. That's not how investing ever works in the real world, and because Robinhood not only made it so easy to buy stocks, but also real easy to make money, anyone investing with Robinhood had no idea that they did not know what they were doing. That reality has sunk in a little bit as the market has become more volatile and is acting in a manner more consistent with how the market actually works. Thus, a lot of these "retail novice investors" are now unsure of themselves and unsure of the market, and it is only natural they might take a step back. And they have. My hope, though, is that what this helps to do is to encourage these "investors" to now delve deeper into how to actually invest and keep at it, and actually have a shot at making some real money. The stock market is actually for everyone. But it is not supposed to be something that one can blindly mess around with in the "real world" and be successful at it. Like anything, taking the time to really understand the stock market and all of the opportunities and intricacies within it to increase gains and mitigate losses is one of the most valuable educations anyone can have. The only missed opportunity would be a failure to understand now what they thought they knew before when making money required little skill.