The future of investment in the stock market is not a stock market.
On Monday, Robinhood (Hood) announced It has launched predictions markets, allowing users to trade in the outcome of the event, and this week’s meeting of the Fed and the NCAA tournament serves as the first two markets on launch.
Last month, readers could remember, the company sought to launch a bet on Super Bowl, but later withdrew that plan.
A month later, the company seems to have a response to regulators.
“The main prediction market -and appropriate contracts -will initially be available in the US via Kalshiex LLC, exchanges of regulated CFTC,” the company said on Monday.
“For the last few weeks, we have been in close contact with CFTC and we are looking forward to continuing to work with them to promote innovation in the future, derivatives and crypto markets.”
Thus, with the decay of regulatory machines and a company that has found a better partner for its latest initiative outside the shares, it seems that Robinhood signals that the future of investment in the stock market is actually sports betting.
As Bloomberg’s Matt Levine wrote in February:
There are two basic mental models that can be used when investing in the stock market – no one knows anything or everyone knows everything.
Both are taken to their extremes, make up a solid support to do what most research suggests that most people should do with most of their investments: park them in a low -budget index fund and then do something else with their time and talents.
For professional investors, both of these models also offer plenty of reasons to try to win the market. Surely, not everyone can know everything, and someone has to know something. Why not us?
But also for retail investors and for the companies that serve them, she regularly increased the message that the best way to do something with your money that you would not do anything that they would eventually see that these relationships fall in both directions.
Companies cannot acquire users and count that they will remain customers through years of inactivity. And some customers of any job, no matter what they should do with the product, will remain as such if there is no reason to remember that they are a buyer.
All this helps to outline the attraction of the prediction market as medium soil.
They get rid of them quickly. They are discreet. And while impact can be applied to any bet in the creative way, there is no (at least no) options in these derivatives.
In your own Paper that is committed to the value value The predictions market contracts, Robinhood writes, “a combination of risk relief, information collection, speculation and learning potential is the prediction markets for valuable economic and information tools for companies and individuals.”
Which, of course.
And speaking of the things everyone knows, the modern American economy is highly funded, but most participants are unable to protect their risk. (As an employee of the W-2 with a mortgage and 401 (K), I actually underwent my local housing market, the Internet media industry and the US stock market for a long time.)
So: Does this new product offering a risk profile for most Robinho users, many of which are probably exposed to the same influence as the author of this post? Probably not.
But what makes it signals is that the role of the stock market in the average person will improve their financial position or risk their financial assets over time will be reduced.
“Democratizing” things like private capital and risky capital, of course, fit into this bucket.
And the placement of that/not a bet on all 67 games that were supposed to play in the NCAA tournament does not scream exactly “de-rosing”.
The shares market is often discussed as a solved problem – similar to baseball, with three true outcomes – but if the right action is known, as mentioned above, to buy a basket and do nothing, then the business strategist and human bias of nature according to the action of the action must somehow alleviate.
At least sports are fun.
