The Rocky roads of robinhood

Alexander Kearms and his family

Alexander Kearms and his family

Rebecca Dworkin, Staff Reporter

This year, the pandemic has caused many people to pick up new hobbies. For some, it may be cooking or working out, or even expressing themselves artistically. For others, it was investing in the stock market.

Over time, accessibility to trading in the stock market has changed drastically which has led to more involvement in the market. 

In the past, people needed to physically talk to a stock broker either in person or over the phone. 

A newspaper was the only access to the changing stock prices. 

Math teacher Robert Denham has been investing in the stock market for 40 years and has been a witness to many changes.

“When I first started I had to call somebody to place a trade and it might not get done for hours whereas in online trading I can do everything myself and had to do my own research, which I’m fine with,” Denham said. “I can log in anytime of the day and place a trade completely on my own and it happens immediately.” 

Today, the internet provides access to so many resources and markets that were not available to the average retail customer twenty years ago. Real time data is accessible with the click of a button, so buying and trading stocks has never been easier. 

Robinhood is an American financial services company known for offering commission-free trades of stocks and exchange-traded funds via a mobile app. 

On January 26th, Robinhood was a headliner in the news. Gamestop is the world’s largest retail gaming and trade-in company. Their stock prices and overall worth has been dropping over the past few years. 

Analysts were predicting that fair value for the stock was between 10-12 dollars. 

Thousands of investors decided to buy Gamestop stocks on Robinhood in order to up the price. Creating a shortsqueeze, Gamestop stock prices shot up to almost 500 dollars a share.

This affected many big businesses like Apple, Google, Facebook, and Amazon, because in order to generate the money to cover their shorts, investors had to sell other assets that had gone up. 

The market as a whole was suffering for about three days. 

Robinhood faced backlash because of its decision to freeze trades for Gamestop. 

The company explained it was required to keep a substantial amount of money on hand in order to process all the trades. However, it was still a primary tool and resource for investors who jumped on the Gamestop roller coaster.

With all this commotion there are still benefits to the stock market and the potential to make a lot of money. 

“A lot of people have benefited from the freedom to invest at an early age without any type of evaluation or credentials or certification to be able to invest.” business teacher and coach Grant Norwood said.

Norwood’s business management class focuses on teaching young students business principles and resource management to prepare them for future business relations. 

Denham also exposes his students to the opportunities in stock investments during his class. 

“I teach in my math classes now- that if you start investing with at least 2000 dollars a year [starting at] age 25 through your retirement plan you can generally be a millionaire by the time you are in your early 60s,” Denham said.

“Looking back I wish I had put in a little bit more than the 2000 dollars, but 2000 a year would be a good place to start and it’s not hard to do when you have a job and are making money,” Denham added.

College student, Alexander E. Kearns tried to get a head start and got involved in the stock market at 20 years old.  

Once quarantine started, and the pandemic continued to spread, Kearns, a student at the University of Nebraska,  decided to invest in the stock market.

  After receiving a false notice of debt indicating that he owed over 700,000 dollars, Kearns reached out to Robinhood customer service three times in an attempt to understand what was going on with his sudden and unexpected debt. 

After receiving automated messages in return with no definite answer, Kearns was fearful that he had just ruined his future.

Unfortunately, Kearns took his life in June of 2020 because of a stock market miscommunication. He left a note stating that he had “no clue” as to what he was doing. 

On February 8th, the family of Alexander Kearns sued the company for wrongful death.

This situation shows that the stock market is an intimidating place to navigate especially for younger investors. 

According to a Forbes article by Sergei Klebnikov, “Robinhood’s founders have since responded to the event pledging major changes to their platform.”

As the economy grows, so do stock prices. That being said, there are numerous rules to follow and it is important to educate oneself before engaging about different investments, markets, and companies in order to get the most out of it safely. 

Luckily, stocks are not the only way to start investments early and there are many other venture for teenagers and young adults to pursue. 

“I would have liked to have been more informed about the power of real estate investments,” Norwood said. “Just due to the natural and predicted and in most cases appreciation of the real estate market is increasing over time. I wish I would have invested more money in real estate.”