Money

Should You Be Buying What Robinhood Is Selling?

This week’s initial public offering of Robinhood Markets Inc., parent of the wildly popular trading app, isn’t just one of the most talked-about IPOs of 2021. It’s the latest in a long series of pitches to everyday investors: Share in your broker’s wealth by buying shares in your broker.

In rare cases, such pitches have paid off big time. More often, you’d have done yourself a favor by taking roughly half your money and lighting it on fire instead.

Just as Robinhood isn’t the first brokerage to offer commission-free trading, it isn’t the first to seek to “democratize” investing or to sell a piece of itself to its own customers.

On June 23, 1971, Merrill Lynch, Pierce, Fenner & Smith Inc. became the first New York Stock Exchange firm catering to individual investors to offer its shares to the public.

Thirsty for fresh capital in a struggling stock market, Merrill flogged its shares to its own customers, tapping the firm’s “awesome recognition among that vast segment of the population,” reported The Wall Street Journal the next day. “Primarily small investors, the type long championed by Merrill Lynch, quickly purchased the entire amount.”

Should You Be Buying What Robinhood Is Selling? Source link Should You Be Buying What Robinhood Is Selling?

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