Robinhood or King Richard?
I don’t like to jump on bandwagons, particularly tech-hate bandwagons, but Matt Taibbi’s article this week about the trading app Robinhood is testing my resolve. It’s titled Pandemic Villains, for Christ’s sake!
Anyway, this line in the piece from Bill Brewster really stuck with me:
“Everything is designed to make investing look like DraftKings.”
Taibbi continues:
“Moreover, the company’s practice of offering push notifications when customers’ stocks move up or down 5% or 10% could trigger an endless cycle of dopamine-generating responses, combining FOMO/clickbait psychology with the betting urge.”
For context, Bill Brewster’s nephew, Alex Kearns, committed suicide in June after mistakenly thinking he had lost $730,000 trading on the app.
The piece brings to mind a conversation I had with my 11th grade “little” in the Big Brothers Big Sisters program, who wanted to know more about investing. He had stumbled upon Wealthfront, a robo-advisor that makes it easy to set up recurring investments in low-fee index funds, and so we talked about what all of it actually meant.
He wasn’t clear on what investing in a single share of a company entailed, let alone a basket of them. He certainly didn’t know that he would be competing against hedge fund and bank traders if he decided to trade individual stocks. The only thing he was clear on was that storing his money in a traditional savings account was a losing proposition.
So I was excited to help him out in the early stages of his financial journey. But what if it had been Robinhood that appeared first in Google, before Wealthfront? And what if he hadn’t had me close by for advice? I’m all for democratizing access to the markets, but access without any up-front education is a recipe for disaster. And it seems kind of strange that a company should be able to profit from the likely scenario of an inexperienced young person buying and selling shares of companies they know nothing about, in the hopes of getting rich quickly. Particularly if they’re being triggered by Robinhood’s marketing engine to do so.
Contrast Robinhood’s attempts to “democratize” investing – push notifications, flashing price movements and free shares at signup – with Vanguard, the inventor of the low-cost index fund whose very funds own the company. There is no predatory marketing scheme behind a fund like VTSAX, Vanguard’s Total Stock Market Index Fund, which has an expense ratio of 0.040% and is much more likely to produce compounded returns for average, inexperienced investors than individual stock picking. No, a product like that sells itself, through word of mouth and education, something Vanguard founder Jack Bogle dedicated much of his life to.
Anyway, just a thought. Two very different models of “democratizing access” to markets, and it feels more and more like we’re moving towards the Robinhood model in all aspects of society. Everything is being disrupted and what we’re left with is a life made up of cute sounding apps whose value is unclear.
Last point on Robindhood: Many of my friends who use the site use it for “fun” or “play” money. These are people with 401k’s and parents who taught them the importance of investing. And they treat Robinhood like entertainment. What does that mean for the less fortunate users?
Something Fishy in Brooklyn
It would appear that the East River’s fish are experiencing their own pandemic this winter. All week, their carcasses have been washing up on the banks of the East River in Brooklyn Bridge Park, leading to some beautiful, grim photos:
According to Google, the species is Atlantic Menhaden, or “bunker” fish, a type of herring found up and down the East Coast in schools of mixed ages, from the youngest “peanut” bunkers to their twelve-year-old elders. The fish are filter feeders, meaning they eat different types of plankton by filtering them through their gills. Commercially, they’re used as fertilizer, as well as bait for blue crabs (go Maryland!) and lobsters.
To no one’s surprise, they don’t look particularly appetizing:
Anne emailed one of the park volunteers, and it turns out this is not unusual – he guessed that oxygen levels in the river had caused the fish to die off in large numbers, which has happened before.
According to the West Side Rag, the Hudson River saw a similar phenomenon last July, and they haven’t been spared this winter’s plight either: “Now it’s December and it’s happening again, according to a reader who asked us to look into ‘all the dead fish in the Hudson along Riverside Park.‘”
The paper reached out to New York’s Department of Environmental Conservation (DEC), who confirmed that reports of dead bunkers are widespread, from the northern Hudson to Staten Island. Consistent with what our inside man in the park told us, the deaths are not uncommon, and could have been caused by a variety of things, from warm temperatures to changes in oxygen levels, and the introduction of a new pathogen.
I’m reminded once again, during this half-assed investigation of ours, of Big Brothers Big Sisters, and what a fellow mentor once said in regards to career pathing: “For everything that you see or use in your life, there is somebody whose job it is to make that happen.”
She put it more elegantly, but what better example of that phenomenon than this? A significant number of an insignificant fish population start to die off, and a whole world of people mobilize before Anne or I even notice: the DEC, commercial fisheries, park associations, local news. Scientists, fisherpeople (will that ever sound normal?), businesspeople, conservationists, journalists. Brooklyn residents.
It’s a fun exercise to play. Pick out something random, and list all of the jobs involved in that one thing. Particularly for someone working in a less-niche field, like myself, it’s a fun reminder that there are many ways to imagine a career beyond the handful we hear about in our day-to-day lives with similarly-employed peers.
Thankfulness Follow-up
In the wake of what I wrote last week, about reflecting on the year, I found this piece by Ryan Holiday particularly meaningful, in which he asks: How can we give thanks on a daily basis for the good in our lives? More importantly, how can giving thanks act as an antidote to our negativity?
Here’s what he says:
“It was easy to think negative thoughts and to get stuck into a pattern with them. But forcing myself to take the time not only to think about something good, but write that thought down longhand was a kind of rewiring of my own opinions. It became easier to see that while there certainly was plenty to be upset about, the balance of the situation was still overwhelmingly in my favor.”
“Now, in the mornings… I try to find ways to express gratitude not for the things that are easy to be grateful for, but for what is hard.”
I do something similar on particularly cold or windy runs, when I focus not on the irritation of frigid knuckles or a billowing shirt, but on my relative good fortune that I’m able to head out for a run on two legs, with healthy lungs and no joint pain.
It’s not easy – I still curse my luck every time my hat blows off and at the start of cold, dark runs – but it’s been helpful in reframing some things I used to let under my skin. Also, as Holiday explains in his post, it becomes more effective the greater your negative framing of the problem, from a messy divorce to a feeling of betrayal by someone you looked up to.
Worth a read, particularly around the holidays when a lot of us reflect on lost friendships, family drama and arguments we wish we never had.
Christmas!
I couldn’t leave this week’s newsletter without a quick injection of holiday serotonin, courtesy of my friend Matt’s new iPhone 12:
Also, from one of my Christmas favorites, Judy Garland’s Have Yourself a Merry Little Christmas, a verse that feels more relevant than ever this year:
Someday soon we all will be together
If the fates allow
Until then, we’ll have to muddle through somehow
So have yourself a merry little Christmas now
I have no idea whether my grandmother even liked that song, but it reminds me a lot of her.
Enjoy the last couple weeks of the year and keep your chins up! Tell someone what they mean to you.
– Emmett
Recent Posts:
My Two Emails – A vision of what email could be
What I’m Reading:
What So Many People Don’t Get About the U.S. Working Class – Joan C. Williams, Harvard Business Review (2016)
“White working class men aren’t interested in working at McDonald’s for $15 per hour instead of $9.50. What they want is what my father-in-law had: steady, stable, full-time jobs that deliver a solid middle-class life to the 75% of Americans who don’t have a college degree.”
The Rookie Mistakes We All Make – Paul Flannery, Running Probably
“What all runners share — be they novices, experts, or people like me who are somewhere in between — is a learning curve. You can flatten that curve through repetition, training and practice. Yet, no matter how much you run, it will never be a straight line.”
What I’m Listening To:
Jim Collins: The Return of a Reclusive Polymath – Tim Ferriss Podcast (Repeat because it’s so good)
“You have to decide as a basic stance. Is your opening basic assumption about people that they are trustworthy?”