The Problem with Margin Investing with Medieval Robinhood

Published Feb 22, 2021 2 min read
Stan Corey
Brains Compliance Advisor
Margin Investing

With all of the attention being paid to Robinhood due to the ability of a large group of small investors banding together to influence the value of a particular stock (or those in power), it appears that they are actually following the original script of medieval Robinhood with one exception: the havoc created is not helping the common person. Instead, the average Robinhood investor is being negatively impacted by having the ability to take risks that are beyond their abilities.

Consider this: the majority of investors with Robinhood have never experienced a true down market/recession. There have been several corrections and short-term pull backs, but since March of 2009, the slope of the stock market has been positive. Add to this the fact that Robinhood has allowed their young investors to have margin investing accounts, and it has become a perfect storm for personal crisis. There have been a few notable news stories of Robinhood investors being so in debt that they have committed suicide. I suspect that many others may have also been victims of this, but it goes unreported.

Brains was developed to take into account that most young investors or those new to the investment arena are in greater need of education and building a portfolio designed for longer-term results and that can focus on the individual’s beliefs and concerns. By taking the time to gain a better understanding of the person’s own belief system, providing helpful information about investment decision-making, and providing access to how professional investors and economists view the markets, Brains gives the investor more confidence in developing and maintaining a portfolio for their own financial wellness.

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