We've talked about the various scams and bubbles that have come to dominate the markets and the role retail investors and their culture have played. Here's some more of the puzzle.
Baldwin makes the whole thing sound so simple, and so . . . free (emphasis ours):You just log in, pick a stock, set an amount, and hit trade. And yeah, you gotta pay a commission, except . . . No you don’t! Cause they don’t take one. That’s right. You can invest in stocks with no commission Zero. Nada. Zilch.So it was with interest that we perused the press release announcing eToro’s Q1 results that landed in our inbox on Tuesday, particularly the top line:
That’s right: eToro more than doubled the amount of commission it earned year-on-year in the first quarter, to $347m — about a quarter of a billion pounds. Not bad for a company that is so generous in its offering of commission-free products.
It’s almost like they’re selling investors one message and consumers another, isn’t it?...
So yes, as we have written about before, as soon as you use any leverage, or decide to trade crypto, or CfDs — which is what eToro is known for — it turns out that you are not paying zero, nada, zilch commission; you’re actually paying quite hefty fees. And as we have also pointed out in the past, moving from trading stocks into other commission-heavy products is a pretty seamless experience.
Quick aside from Investopia [emphasis added]
What Is a Contract for Differences (CFD)?A contract for differences (CFD) is an arrangement made in financial derivatives trading where the differences in the settlement between the open and closing trade prices are cash-settled. There is no delivery of physical goods or securities with CFDs.Contracts for differences is an advanced trading strategy that is used by experienced traders and is not allowed in the United States.
Back to Ms. Kelly:
But this isn’t about luring customers into fee-paying products, you understand; this is about empowerment. No, really. Like all good companies these days, eToro has a serious social mission, as chief executive Yoni Assia tells us:eToro’s mission is to empower people to grow their knowledge and wealth and we see our platform as a bridge between the old world of investing and the new.
And one more thing.
Retail investors taking out personal loans to buy stocks…what could possibly go wrong?! (h/t @SoberLook) pic.twitter.com/gCaWtCCWLz
— Megan Greene (@economistmeg) June 22, 2021
No comments:
Post a Comment