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Robinhood has made stock trading fun, cheap, and attractive to the wealthy young—not the crowd that the financial industry typically caters to.

But the app also has a history of serious bugs, and if investing feels like a game, it may not be good for people’s wallets.

in front Robinhood’s (extremely unusual) IPO i have planned for this week colleague Erin Griffith He talked to me about the ups and downs of the app and how the company fits into the fintech revolution.

Shira: Let’s start by explaining to us why Robinhood has gotten so much attention.

Erin: Robinhood delivered the trope of subverting its predecessors in Silicon Valley. Many start-ups aim for this, but few actually achieve it. The company has made stock trading as easy as playing Candy Crush. It made trading free and brought many young people to invest in stocks. Charles Schwab has forced other online brokers like Fidelity and E-Trade to change more than they have in years.

But they also point out that Robinhood poses dangerous downsides, in the same way that people discuss the trade-offs of companies like Google and Facebook.

What are those downsides?

Robinhood may feel more like a video game or casino to users than an investment account, which can be challenging at times. inexperienced investors take big risksespecially when doing a type of trade that involves borrowing money. Investment managers Warren Buffett and Charlie Munger recently discussed Robinhood, which Munger calls it “below humiliation” and “a vile, disreputable operation.”

at Robinhood make more money when users trade more, however, many studies have found that this type of behavior does not provide the best returns on investment. (The company’s financial documents says “the vast majority” of its clients don’t fit the definition of “day traders” who take a lot of fast trades.)

Professional traders can also be reckless and their actions are sometimes indistinguishable from gambling. Robinhood’s critique is just an elitist attitude that most people cannot be trusted to invest their own money?

That’s what Robinhood believes. defiant letter letter from the founder of the company to potential IPO investors. But people who follow the company have also asked if Robinhood exists. eagerness to grow and shake the system led to serious errors.

What kinds of errors?

The app has crashed at some key moments. Lately paid a record amount to the securities industry’s self-regulatory body for these and other mistakes, including failing to do enough to screen out clients unsuitable for some type of higher-risk trading.

A young man killed himself last year after a misunderstanding This led him to believe he was in a loophole of more than $700,000 from Robinhood swaps, and he couldn’t reach the company to resolve it. A traditional broker might not have allowed this type of investment without guidance or it might have been easier for a client to find help.

You wrote that we entered a golden age for new types of financial companies Including Robinhood, payments startup Stripe, and semi-automatic financial advisors. What’s going on?

Many people wanted something other than large, traditional financial institutions, but they did not have very good or reliable alternatives. Almost a decade ago, when Simple, one of the first mobile banking companies, always crashed, the attitude was this: That’s what happens when your bank is just an app.

Fast forward a few years and now the technology building blocks for new financial companies have become more robust and trust in them is growing among the public and regulators. It’s great that people have more options for banking and finance, but there are tradeoffs nonetheless.

A number of these companies struggled with repeated blackouts, frozen accounts, hacks and other important issues. Conventional financial institutions have a lot of problems, but they probably won’t be able to hold you back from your money without recourse.

Before you go …

• Words are not enough to describe how rich these companies are. combined earnings Apple, Microsoft and Google for three months it was four times Walmart’s profits for a year. Yes, they are rich.

• Children use the internet. How do we keep them safe? Facebook’s Instagram listed the new measures My colleague Erin Woo informed me that she will not allow advertisements in the app to keep young people away from unwanted interactions with adults and that target children’s interests or online activities. But as the company touts new safeguards, The Wall Street Journal to create Automatic Instagram suggestions for horribly sexualized hashtags and child-related comments.

• Look, we need mindless TV: The HBO Max video streaming app was problematic on the Roku streaming device, especially for TVs. Bloomberg News spoke to disappointed customers, some left 37 pages of HBO app grips or workarounds on Roku’s website. (The root cause of all this is a broadcast TV business model. copied all the old TV habits.)

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Must watch TikTok star James “Bear” Bailey enchanting people in a market Singing the R&B song “All My Life”. (Bailey regularly posts videos of her singing at a gas station near her home.)

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