Robinhood Versus Vanguard!

Before I get started…Rachel and I have been doing the four mile easy cruise ride around Coronado each day and last night I took this picture of downtown San Diego from Coronado. I rarely venture to this side of the island but it was a gorgeous sunset and a pretty evening:


Yesterday I saw this tweet from Bloomberg’s ETF analyst Eric Balchunas that said Robinhood had more mentions than Vanguard:

I chimed in with – The signal is the beginning of the end for owning 500 stocks and being over diversified.

I also chimed in with – Fascinating … the unbundling of ‘fake’ passive investing has begun. This is a huge win for the markets and the instividual and we should be thrilled. Instead, the media mocks it.

What I mean with ‘fake’ passive is the S&P Vanguard ETTF is not passive. It is a constantly changing market cap weighted portfolio of the largest 500 stocks.

We should not forget the fact that a 500 stock portfolio loaded with companies started more than 20 years ago is too much diversification and one of the problems that this generation faces when they invest.

Along comes Robinhood to ‘unbundle’ Vanguard and the other large ETF companies and all the media can focus on is how terrible Robinhood users are at investing (no real data)…(Ben Thompson has written some great essays on the subject of Unbundling and I have used it here to apply to the Vanguard S&P ETF’s).

Vanguard is not going away but they ‘could’ have been unbundling the indexes themselves and beaten Robinhood to the punch with free trading and fractional ownership. That is a real story.

Full Disclosure – Social Leverage is an investor in Robinhood.