Robin Hood vs. RobinHood

 Like so many, I’ve become interested in this week’s stock market news. The frenzy is the outcome of the sudden high volume of trading in companies largely thought to be, to put it nicely, bargain stocks. But it is also a reflection of the varied perspectives on what it might mean for the future of trading. The Wall Street Journal reports that GameStop rose 68% this past Friday. Something hedge funds did not anticipate. I actually purchased some GameStop stock - I also already sold it. This had absolutely nothing to do with taking with some kind of anti-Wall Street stand. I like to think of myself as a casual swing-trader of sorts and have had an on-again/off-again relationship with my E*TRADE account for almost 20 years. There are also some traders that saw RobinHood as revolutionary in, for example, eliminating commissions on trades. 

But make no mistake, this is not Howard Pyle’s “Robin Hood.” This is not the legendary medieval leader of a merry band of outlaw disrupters, making trouble for King John and the Sheriff of Nottingham. When Little John goes to the Nottingham Fair (against Robin’s wishes), he was competing for fatted steer and barrels of “March ale” that was simply waiting to be consumed. RobinHood, the company has to maintain deposit accounts with their affiliates until trades are finalized. I suppose its like a casino having to maintain a certain amount of cash on hand. Because of the increasing popularity in RobinHood, to say nothing of trading in general during the pandemic, brokers are now raising deposit requirements - that’s less steer and March ale for the folks back in Sherwood.      


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