Facts have proved that “zero commission” stock trading may also incur extremely high costs.
Not only for speculation Gamestop (GME-US) And other retail investors who have suffered heavy losses in stocks and instigated the enthusiasm of investors so that they are forced to raise billions of fundsUSDRobinhood is the same, the stock market itself is the same, the market must deal with crazy fluctuations that have nothing to do with fundamentals.
If the surreal events that occurred in the past week have any enlightenment for investors, it is that even though it has all the advantages, the “democratization” of the stock market driven by the commission-free model is not without risks, because any situation can easily ferment quickly and dangerously Sliding towards “mass rule.”
Stephen Wendel, Head of Behavioral Sciences at Morningstar, said: “When friction is reduced, you can expect that sports will greatly increase and trades will increase, so zero commissions have an impact.” “The more frequently people get the latest prices, the greater the price volatility. Will change their behavior.”
Of course, the original intention of zero commission is to make the competitive environment that is too inclined to Wall Street institutions fairer, and to help ordinary Americans to take the financial future in their own hands. However, the recent air-squeeze war is not only shouting at anyone Robinhood, which can trade the hottest stocks and options slogans for free anytime, anywhere, has raised troublesome questions, and the same is true for the entire brokerage industry.
Online giants such as Schwab, E*Trade and Interactive Brokers, which followed Robinhood’s cancellation of trading commissions, have also been affected or forced to restrict certain transactions in the recent short-squeeze storm.
Larry Tabb, an analyst with Bloomberg Industry Research, said: “We have made the cost of gambling in the stock market cheaper than sports betting or gambling in Las Vegas.”
Today, Robinhood is at a crossroads and the company has been forced to borrow or raise billionsUSDTo support capital, regulators and lawmakers plan to review their decisions, while a large number of users who feel betrayed because of restricted transactions vowed to leave the platform.
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