Leaving Robinhood? What You Should Know about Robinhood and Gamestop

After Robinhood Investing App blocked the ability to buy GameStop and others, many are leaving Robinhood for the likes of Webull, M1 Finance, and More. Should you leave Robinhood? Today I give you my full perspective on what just happened.

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#investing #robinhood #gamestop

This entire GameStop news combined with a recent Class Action Lawsuit against the Robinhood Investment app has entered us into truly unprecedented times in the investment space.

With all this news about Robinhood screwing investors out of buying GameStop, Nokia, and AMC stocks among others on January 28th, alongside of a new class action lawsuit.
You might be wondering:
Should I continue to use Robinhood? Should I cash out and run away?

What am I doing?

I am going to share some perspective that you must know before you make a decision if you tell Robinhood to go {{{} themselves or you stay with Robinhood as your investment strategy. My goal is to give you value in today’s video so you can make the BEST decision.

Before we talk about the important points about what Robinhood did that you must know, it’s important to understand how we even got here.

A bunch of fat cats from wallstreet, such as Melvin Capital and a few other major hedge funds were ganging up on GameStop to drive down the price of this company who had an old school model just like Blockbuster. They were standing to make MAJOR money with the share price dropping down.

Then you have a bunch of internet chatter where the little guys (like you and I) start talking GameStop and putting enough money into the stock to start driving the share price UP

Then cue up Robinhood who, during the height of this surge, decides to cancel the ability for buyers to get in on GameStop, Nokia, and AMC among others.

Do I think this was right? No, I don’t....but there is something I think you and I are missing here....and I’m going to explain what we need to know.

I ASKED YOU ALL ON A RECENT POLL AND IT LOOKS LIKE OVER 50% of votes will be transferring to Webull or M1

This is what I think really went on January 28th.

When you buy a share from your favorite brokerage, you’ll typically see the share execute and arrive in your account immediately as long as it’s during trading hours. But on the back end there is a much longer process that goes on...

First, you say you want to buy a share of a stock. Your brokerage then uses a Clearing house to execute and buy the share of stock from the seller. This process can take 2-3 days. During this time, a clearinghouse has to have enough capital to cover the cost of the share you just purchased in the case that something crazy happens, or the company (seller) goes bankrupt.

Brokerages such as WeBull, Stash, M1 Finance, use APEX Clearing house. So the reason that most of these apps halted game stop on January 28th was because APEX asked them to do so.

Robinhood, like Schwab, E*Trade, and Vanguard are self clearing...meaning they don’t use a 3rd party clearinghouse to help them.

Here is where things get SUPER interesting:

During the course of the GameStop surge, orders for shares were coming in at a massive rate, sending the volatility of the stock through the roof. If you have brokerages sending in orders of a massive amount, with potentially limited outstanding shares left of a company stock, the clearing firm has to keep enough capital to pay you back if they aren’t able to execute the share correctly.

So if you bought gamestop at $200 and the clearinghouse isn’t able to execute the share, and the price is now up to $400, they have to pay you what the share price is worth....you and everyone else that went crazy buying shares.

So with this new perspective, are you staying with Robinhood or still pulling out? Comment below and let’s chat.

Bob

*Disclaimer: Bob is not a financial advisor. Please contact a professional financial advisor prior to making any decisions. Some of the links and other products that appear on this video are from companies in which Bob Sharpe earns an affiliate commission or referral bonus. Bob Sharpe is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available.

Видео Leaving Robinhood? What You Should Know about Robinhood and Gamestop канала Bob Sharpe